E-commerce has had a major effect on the industrial market, and it’s largely been a positive one, according to the latest research from Marcus & Millichap.
In its latest national industrial research report, Marcus & Millichap said that the U.S. industrial vacancy rate feel to its lowest point in 16 years at the end of the second quarter of this year. The big driver? Marcus & Millichap pointed to gains in retail sales, a boost in residential construction and a steady performance from U.S. manufacturers.
But Marcus & Millichap said that retail sales are the biggest factor in an industrial upswing that is now in its seventh straight year.
And when you talk about retail, you have to mention, of course, Amazon.
Marcus & Millichap said that Amazon will be operating more than 70 fulfillment and sorting centers by the end of 2016, nearly two times the number the online giant ran in 2011. Amazon, then, continues to influence the warehouse and distribution decisions made by industrial users.
Other retailers — big names such as Walmart — are following suite. As they attract more online customers, these retailers are opening new warehouses closer to population centers so that they can deliver products as quickly as possible to as many customers as possible.
Marcus & Millichap says that in part to meet this demand from e-commerce, developers will complete industrial projects totaling 190 million square feet in the United States in 2016. Deliveries in major regional distribution hubs — such as Chicago — will account for more than half of the space delivered across the country this year, Marcus & Millichap said.
The U.S. industrial vacancy rate will fall 40 basis points this year, according to Marcus & Millichap, hitting 5.9 percent. The industry will see the net absorption of more than 200 million square feet during the year. Marcus & Millichap says that nearly 1.1 billion square feet of industrial space has been occupied since the vacancy rate peaked more than six years ago.