As demand for warehouses, distribution centers and other industrial property continues to outpace supply, the availability rate for U.S. industrial real estate declined by 10 basis points (bps) in the second quarter. This marks the 32nd consecutive quarterly decline, as demand, according to a new report from CBRE released on July 11.
Availability of U.S. industrial real estate dipped to 7.2% in the second quarter, the lowest point since 2000. The streak of 32 consecutive quarters of declining availability is the longest since CBRE started tracking the data in 1988.
Demand for warehouses and distribution centers remains driven by the growth of e-commerce and the general strength of the U.S. economy. Overall, net absorption across the 55 markets tracked by CBRE amounted to 59 million sq. ft. in the quarter.
“The industrial sector in the U.S. remains remarkably balanced,” said Tim Savage, CBRE Senior Managing Economist and Principal Data Scientist. “As e-commerce changes the landscape, demand for industrial property remains strong. However, we remain focused on the developments in trade policy, which could impact the industry.”
CBRE expects declines in the U.S. industrial availability rate to flatten out over time, as the amount by which demand exceeded supply narrowed to 22 million sq. ft. the 12 months ended in June from 65 million sq. ft. in the prior year. CBRE defines availability as the sum of vacant space plus space that is currently occupied but otherwise being marketed for use by new tenants.
In the second quarter, 39 US markets posted declines in industrial availability from the first quarter, 21 reported increases and four remained unchanged.
Among the markets that registered the largest declines in industrial availability in the second quarter were New Haven, Conn. (down 430 bps), Tucson (down 310 bps), Sacramento (down 260 bps) and Jacksonville (down 220 bps). Those posting the largest gains in availability include Pittsburgh (up 150 bps), Louisville (up 140 bps) and Allentown (up 130 bps).