May 16, 2018
The U.S. industrial market is the darling of commercial real estate asset classes. That fact is borne out in the banner year the sector experienced in 2017, and detailed in Transwestern’s national industrial market report.
Industrial markets established new records in 2017, as consumer confidence drove the sector to a 17-year high in December. That was the eighth consecutive year of growth, and it marked the 31st straight quarter of of positive absorption, as well as 29th consecutive quarter of declining vacancy.
Three markets, Dallas/Fort Worth, the Inland Empire and Atlanta, each reported more than 20 million square feet of absorption in 2017. Transwestern’s Ryan Tharp notes, “This robust activity was echoed nationally, and continues to drive demand and boost rents.”
A big part of what is driving the robust and continued industrial growth is e-commerce, which in turn fueled record container volumes through U.S. ports. That was reflected in three large transactions completed in Q4 2017 that were consummated in the nation’s leading port markets. In Southern California’s Inland Empire, Walmart claimed more than one million square feet of space and Solaris Paper took 862,000 square feet, while in New Jersey, Best Buy signed a deal for 725,000 square feet.
Three markets, Boston (24.5%), Seattle (22.8%) and San Francisco’s East Bay Area (22.5), exceeded 20% rent gains, year-over-year. Seattle’s Puget Sound market, in particular, saw its vacancy rate drop to a historic low of 2.7%, due to unabated demand.
Transwestern’s Matthew Dolly says, “What is remarkable about the current 5.9% vacancy rate is that it has been cut in half since the fourth quarter of 2010, despite 873 million square feet of new development during the same period. Nationally, we’ve experienced four consecutive years of at least 200 million square feet of positive absorption.”
For comments, questions or concerns, please contact Dennis Kaiser