US Logistics Sector Has a Long Horizon

6606 Pontius Rd. in Groveport, OH, a new speculative 1M SF facility located near Columbus that Saddle Creek, a 3PL, recently agreed to occupy.

CHICAGO—As reported in GlobeSt.com last week, Chicago-based JLL recently finished a survey of 650 of its logistics experts from across the world. And most agreed that strong demand for logistics facilities should remain consistent globally during 2016 and rental growth should also continue across all markets of the world through 2017. That holds true for the US market as well, and the overall feeling was that any fears of the sector soon hitting a peak and then perhaps going flat are unfounded. “We anticipate that leasing and investment growth in the industrial and logistics sector still has a long horizon,” Craig Meyer , JLL Americas ‘ president for industrial brokerage and capital markets, tells GlobeSt.com. “Market fundamentals continue to be strong. So do many US economic indicators like job growth and consumer confidence. And with a healthy pipeline of tenants in the market, future leasing activity is not expected to drop off – but even though speculative construction is picking up in some markets, it is only doing so because of a continued lack of leasing options for new, prime-quality warehouse and distribution space.” Many observers feel especially optimistic about the logistics sector due the increasing demands from consumers for quick-delivered products. Most companies have felt the pressure to expand and modernize their distribution buildings or hire 3PL firms that have advanced facilities. The robust demand has resulted in a building boom for the sector, but JLL experts continue to report a diminishing supply for corporate occupiers. Still, that situation has improved in the past year, and the market will remain only slightly undersupplied during the next six months. The majority of the JLL respondents did feel that rents would hit a peak in 2016, but most said this would happen in the fourth quarter, and a significant percentage forecast that rents will not peak until 2017. This is certainly good news for investors, who have been on a buying spree. In fact, the company found that investment demand in the Americas for this product was the same in the last six months of 2015 than it was in its prior annual survey. “Big box’ industrial product has become an extremely sought-after asset type for more and more investors, both foreign and domestic,” Meyer adds, “and given its stability, we do not see investor demand waning anytime soon.”