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No sign of slowdown for U.S. industrial market

Staff Writer |
The U.S. Industrial & Logistics market’s long run of strong gains, which stretches back to 2010, shows no signs of abating in 2018 amid the continued growth of e-commerce.

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This is according to CBRE’s 2018 U.S. Real Estate Market Outlook.

CBRE expects rents for U.S. warehouses and distribution centers, already at record levels, to continue rising this year at the same pace as prior years as the new supply of facilities lags voracious demand.

That created a prolonged expansion for the industry that so far tallies 24 consecutive quarters of rent growth and 30 consecutive quarters of positive net absorption.

The sector’s growth has attracted investors to the point that global institutional investors queried in CBRE’s annual survey last year selected industrial real estate as their most preferred asset class.

Even so, CBRE reports that capitalization rates for industrial real estate have stabilized, and the pricing gap between top-quality, Class A properties and Class B properties has narrowed.

CBRE foresees several nascent development trends starting to take root this year. Among them: Developer interest in constructing multistory warehouses in select urban sub market markets with few available properties, high land prices and rising lease rates.

Eventually, factors such as automation and driverless trucks will influence industrial site selection, perhaps allowing for distribution centers to be built farther outside of population centers. But that phenomenon is more of a long-term factor.

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