North America’s 2015 industrial market sector experienced one of its strongest years to date, according to Colliers International Group Inc.‘s Industrial Logistics & Transportation Solutions 2016 Outlook – Big Box Market Report.
The report, which provides a comprehensive analysis of industrial big-box transactions in North America’s eight largest distribution markets, showed that the big-box market led 2015 in construction and transaction activity.
A total of 61 million square feet were delivered in 2015. Chicago alone completed 9.4 million square feet of new big-box projects. That’s a large number compared to 2011 when a total of 9 million square feet of big-box space was built nationally.
Colliers’ research of early activity in 2016 indicates another strong year for occupier demands—especially as the growing pressure from e-commerce for swift logistics will continue to influence this space across North America and beyond.
“As it stands, the big-box market has made a 180-degree turnaround from where it was during the financial crisis of 2008 to 2010,” Jack Rosenberg, national director of Logistics and Transportation Solutions | USA for for Colliers International, said.
Rosenberg and his team predict that the surge in absorption of industrial big box facilities will continue for another year or two as retailers begin building e-commerce facilities, which are markedly different from traditional warehouse/distribution facilities.
Notable market highlights for Chicago include:
• Big-box construction is driving this market, with 9.2 million square feet of new construction underway.• 2015 big-box leasing activity totaled 3.9 million square feet in the fourth quarter (a 62.5 percent increase over third quarter) and 13.72 million square feet for all of 2015.• Capitalization rates for big-box buildings continue to compress, averaging 5.0 percent in 2015, a 60-basis-point decrease from 2014’s average cap rate of 5.6 percent.• The average net effective taking rent for big-box spaces was $3.80 per-square-foot net during the fourth quarter of 2015, representing an 8.2 percent increase when compared to the $3.51 per-square-foot net rate recorded a year ago.