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Cushman & Wakefield: Industrial market continues to soar

Dan Rafter April 4, 2017
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The U.S. industrial market’s vacancy rate is at its lowest level in more than a decade.

That’s the good news from the latest Cushman & Wakefield industrial report, which found that the overall vacancy rate of the U.S. industrial market stood at a low 6.7 percent for the first quarter of 2015.

John Morris, leader of Cushman & Wakefield’s industrial services group in Rosemont, Illinois, said that the nation’s continuing economic recovery, the growing strength of e-commerce companies, a boost in domestic manufacturing and a solid housing market have all contributed to industrial’s rise.

Morris added that the rise of e-commerce — a growing number of consumers are taking to the Internet to complete more of their purchases — has been an especially important factor in the strength of the national industrial market.

“Market fundamentals continue to be strong, driven by a resilient economy, good job creation and a relatively strong housing market,” Morris said. “But the biggest requirement stems from the need for facilities to satisfy the continued growth in e-commerce activity.”

Because e-commerce is so strong, retailers are adding an ever-growing number of distribution centers to meet demand from consumers who want to buy their shoes, clothing or electronics online and have them delivered to their door three days later.

As the industrial vacancy rate falls, the average rents that owners can charge is on the rise. Cushman & Wakefield reported that the average rent for warehouse space has risen 11 percent from where it stood at the end of 2011.

And rents should continue to climb. Morris said that he expects warehouse rents to jump another 5 percent by the end of 2015 and to rise more than 10 percent during the next three years.

“The industrial real estate market has powered through some turbulent times. What we expect from this year is that even in perhaps a more variable economic market overall, industrial real estate and its market will continue to perform strong,” said Morris.

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