by Brianna Crandall — February 10, 2017 — Availability of industrial space in the United States declined for the 27th consecutive quarter, extending the longest streak on record, according to a new report from global property advisor CBRE Group.
Industrial space availability declined to 8.2 percent in the fourth quarter (Q4), down five basis points (bps) from the third, to its lowest level since Q1 2001. Of the 64 major U.S. markets tracked by CBRE, 40 posted declines in industrial availability in Q4, and 24 registered increases.
The Q4 decline in availability fell short of the average quarterly decline of 25 basis points over the past six years. This is likely more a function of growing supply rather than waning demand, says CBRE. The firm defines availability as all space listed as available for lease, including both vacant space and space currently occupied but marketed for sublease.
Jeffrey Havsy, CBRE’s chief economist for the Americas, noted that demand for industrial space has consistently outpaced new supply since the second quarter of 2010, saying:
The market still is solid for demand, but supply finally is catching up. We’re not expecting availability to end up rising dramatically. Rather, it ultimately will remain in balance. As supply and demand continue to equalize, we’ll see rent growth start to flatten out.
Asking rates for net rents set an all-time high of $6.58 per square foot (sq. ft.) per year in Q4.
CBRE expects that, once final figures are tallied, developers will have completed construction of roughly 179 million sq. ft. of industrial space last year in the dozens of U.S. markets that CBRE tracks.
Among the markets that posted the largest declines in availability over the past year were New York (down 260 bps), Orlando (down 260 bps), Memphis (down 230 bps) and Philadelphia (down 180 bps). Among those with the largest gains are Houston, Denver, Austin and California’s Riverside market.
The full report is available upon request or downloadable upon registration.