Sales of industrial buildings ticked up 3% in the fourth quarter, but for the year, sales velocity was down 11% from 2014. While the number of buildings sold in 2015 ticked lower, prices actually rose a bit. The median price advanced 5% in 2015, reaching $71 per square foot.

Looking ahead to 2016, development activity will once again be outpaced by net absorption, driving vacancies lower and supporting continued rent growth. Employment growth will be fueled by population-serving sectors, including new home construction, which should gain momentum more rapidly than in earlier points in the recovery cycle. As homebuilders increase activity levels, construction businesses and retailers will require additional industrial space.

The improving operating conditions will likely continue to support the local investment climate. Sales activity slowed somewhat in 2015, but much of that decline was due to a lackluster start to the year. After the first few months of the year, sales velocity was healthy in the second half of 2015, and activity is expected to remain healthy in the coming quarters. While the prospect of an interest rate hike loomed over the market for nearly all of 2015, the impact on cap rates was negligible. Assuming interest rates rise at a gradual pace, the impact on property pricing should be modest.

Colliers has added more than 3 million square feet of user build-to-suits and more than 2 million square feet of speculative development product to the Southwest Valley distribution market in the last five years.