CHICAGO—The US industrial market rebounded during the third quarter from a relatively slow start to the year, according to the latest stats from Colliers International. Tenants absorbed just a bit under 69 million square feet, the third highest quarter on record.
The firm's researchers attribute much of the market's energy to e-commerce and third-party logistics users, which have helped push occupancy gains for the year to more than 183 million square feet and lowering the overall vacancy rate 0.2 percentage points to just 5.2%.
“Looking forward, the industrial sector should continue to benefit from supply chain modernization brought on by e-commerce demand, although labor availability might prove challenging,” the report says.
The US industrial sector continues to far outperform all other segments in the commercial real estate industry, with record levels of absorption, rent growth, construction and occupancy, all fueled by positive economic drivers and structural shifts favoring warehouse space.
The national industrial vacancy rate was the lowest rate on record despite more than 170 million square feet of new supply completing in the first three quarters of 2017.
Developers are also coming close to setting new records. The amount of product under construction hit 222 million square feet in the third quarter, the second-greatest quarterly level on record. Colliers adds that vacancies could rise modestly in coming quarters if absorption does not keep pace.
The tightening markets combined with all the new class A industrial space drove up asking rents to $6.32 per square foot for all product types in the third quarter, 10% higher than the same time last year and the highest asking rent on record.
And Colliers also has a sunny outlook on next year. “Essential indicators for industrial real estate, including loaded inbound container volumes and intermodal rail volume, continue to move in a positive direction,” according to the report. “US seaports are booming, with all major locations posting year-over-year increases in loaded inbound container volumes. Rail traffic also remains robust as year-to-date volumes are up more than 3% compared with the previous year.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
