CBRE Explains Favorable Conditions for Multistory Warehouse Development
A recent CBRE report on industrial and logistics property indicates demand has outpaced supply for 32 consecutive quarters.
NEW YORK CITY—The factors indicating the most favorable conditions for developing large, multistory warehouses are a large dense population, high industrial land prices and rents, and significant e-commerce use among residents, according to CBRE.
Analyzing those factors, the brokerage and advisory firm found the top five cities to develop multistory warehouses in the US are New York City, San Francisco, Miami, Chicago and Los Angeles. The sixth one listed is Seattle, WA—where Amazon is headquartered.
The Q3 industrial properties report points to specific multistory logistics construction in the New York City boroughs Brooklyn and Bronx that’s underway to attract last-mile tenants. Warehouse developers include Prologis, DHP, Goldman Sachs, Innovo Property Group and Square Mile Capital. In a GlobeSt.com interview, Innovo’s CEO Andrew Chung says their Bronx multistory warehouse at 2505 Bruckner is responding to the demand for faster and faster deliveries.
The CBRE study notes that consumer spending, business inventories and industrial production all have shown measured growth. It states spending rates have hit their highest level since the 2008 recession.
However, that could make some investors wonder how a recession or economic slowdown will affect industrial warehouses?
But for now, the CBRE report indicates conditions are strong in New York City for multistory warehouse development. Across the US, net asking rents in the industrial sector increased 1.7% in Q3 to $7.21 per square foot, which is the highest level since CBRE began tracking the metric in 1989.