The U.S. industrial vacancy rate dropped 20 basis points (bps) to 8.8 percent during the second quarter of 2016, largely driven by companies building or leasing warehouse space to meet continued demand for e-commerce shopping, according to CBRE. The decline marked the 25th consecutive quarterly drop in available U.S. industrial space.
“Plummeting U.S. industrial vacancy rates signify that this sector of the commercial real-estate market is benefitting from increasing acceptance of the e-commerce model,” says Chris Roach, president of BBG Valuation, an independent national commercial real estate valuation and assessment firm headquartered in Dallas. “We anticipate this downward trend in vacancy rates will continue for at least the remainder of this year.”
According to CBRE’s second-quarter U.S. industrial and logistics report, the national industrial market expanded for a 25th consecutive quarter, logging 66.2 million square feet of positive net absorption. This was up 8 percent over the previous quarter.
At the same time, a total of 41.6 million square feet of new supply was added nationally, which failed to keep up with demand.
The growing trend in e-commerce shopping is expected to continue to fuel demand for warehouse space, which is needed to store inventory for shipping directly to consumers buying goods online.
The latest U.S. Commerce Department report on retail sales supports Roach’s claim that the vacancy rate will continue to fall this year. In June, retail sales grew at 0.6 percent from the prior month and surpassed most analysts’ predictions, who expected a modest 0.1 percent gain last month.
The retail sales report is generally seen as an important indicator for the direction of the U.S. economy, as consumer demand is a major contributor to stoking the country’s economic engine.
— Haisten Willis