Q3 2019 Industrial: “Sturdy” Fundamentals Drive Rents, Absorption

Though some of the metrics slowed just a bit, the overall consensus when it came to Q3 2019 industrial was that the sector continues strong when it comes to leasing, vacancies and absorption. NKF cited “sturdy” fundamentals for the sector, evidenced by increasing asking rents and continued tight vacancy. While absorption moderated in response to lack of available product, “leasing velocity remains high,” the NKF analysts said.

CBRE researchers, in the meantime, were impressed by rents, which had reached their highest levels since the brokerage firm began tracking the metric in 1989. The strong consumer sentiment, the unemployment rate at a 50-year low and increasing business inventories and industrial production will continue supporting the industrial and logistics sector, the analysts added.

While CBRE was impressed by the highest-level rents, Cushman & Wakefield pointed out that vacancy remained at an all-time low, with tight market conditions and solid demand continuing to support rent growth, “especially among the warehouse/distribution products,” the analysts said. There are, however, some moderating trends: The Cushman & Wakefield analysts pointed out that “new supply is on track to outpace overall demand by about 70 million square feet in 2019,” they said. The outlook from the company was continued new supply and modest demand.

CBRE’s outlook pointed to “continued high levels of user demand and more available space options due to recent deliveries.” And, NKF researchers cited continued record-high asking rents and low vacancy, allowing “the industrial market (to) sustain its above-average growth into 2020.”