Omni-channel distribution, e-commerce and other current warehousing trends are making it tougher than ever to find available warehouse space. Cushman & Wakefield, a commercial real estates firm, tracks the national vacancy rate of warehouses, distribution centers and other logistics facilities, and for companies seeking available warehousing space, the news isn't good. A year ago, the overall national vacancy rate stood at 6.6%, which at the time was the lowest level since 2001. That rate has continued to fall over the past year, however, and now stands at 5.6%.
"For almost 20 years, from 1993-2011, U.S. industrial net absorption tracked GDP very closely, and the two metrics have had a tight correlation," notes John Morris, executive managing director and lead for Logistics and Industrial Services for the Americas. "Since 2011, however, this connection has been broken, as net absorption outperformed the economy. E-commerce, urbanization, last-mile, same-day delivery, and similar phenomena affecting our business, all of which are new, are busting older market paradigms, all to the benefit of the industrial real estate market."
California continues to be extremely tight in terms of available warehouse space, as half of the 10 toughest places are in the Golden State. Three other places in the top 10 are, like California, in warm weather climates in the Southeast.
While Cushman & Wakfield anticipates that overall supply will surpass demand in 2017, companies should expect upward pressure on rents at least until then.