Despite construction boom, demand for US industrial space looks likely to exceed supply in 2021
CBRE report highlights strong market fundamentals, with 44% of space under construction already pre-leased
A report by real estate services company CBRE says the storage business in the US is booming. Although there are millions of square feet under construction, demand may still exceed supply if demand continues at 2020 rates. There is more than 186m sq ft under construction but nearly 44% of that is pre-leased.
E-commerce facilities represent more than 27% of the industrial real estate market share in the 22 largest markets in the US in 2020. Third-party logistics providers had 26% of market share, followed by general retail and wholesale at almost 25%.
The CBRE report also notes that strong industrial real estate demand correlates with population increases, so cities like Phoenix, Arizona, and Columbus, Ohio, (which has an inland port) are emerging as locations with strong demand rates because companies want to get their inventory close to their customer base.
Companies are also looking at cities with good transport hubs, like Memphis with its major air hub.
2020 saw an acceleration of market trends for low vacancy rates and rising rents. The vacancy rate for buildings 200,000 sq. ft or larger was 4.6% in 2020, down from 5.2% in 2019. Companies have been caught out by rising rents, having signed a lease five or 10 years ago, and are now having to look for options with more reasonable rents.