Demand for top-notch logistics space remains strong across the country, so strong in fact that six of the top 10 markets with the fastest growing logistics rents globally are located in the United States, according to CBRE’s “Global Prime Logistics Rents” report released this week. The global prime industrial rent survey provides a snapshot of achievable net rental rates for high-quality, Class A logistics space in traditional and emerging global hubs.
With a nearly 30 percent increase in rents during 2015, Oakland, Calif., posted the largest gain. To determine the percentage increase, researchers gathered information based on industrial distribution space of the highest quality and specification, and in the best location, within each industrial hub.
In North and South America, rents for prime logistics space increased 5.6 percent during 2015, largely due to massive growth in U.S. coastal markets where strong occupier demand drove up pricing.
In Oakland, which also recorded the largest annual increase in prime rents globally, flight-to-quality is common for inner-bay logistics users despite the high cost. New development in some markets, like the Inland Empire, is also
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commanding premium rates.
In addition to Oakland, U.S. cities in the top 10 for fastest growing prime logistics rents include New Jersey at No. 2; the Inland Empire at No. 3; Los Angeles-Orange County at No. 7; Dallas-Fort Worth at No. 8; and Atlanta at No. 9. (See chart for percentage increase.)
Other cities within the Americas that are in the top 10 markets for rent increases include Santiago, Chile, and Ciudad Juárez, Mexico.
These are major global and regional hubs that are targeted by many logistics users due to their large catchment areas (the size of the market that the hubs have access to) and access to key supply chain infrastructure, according to the report.
Markets in the Americas are seeing strong demand for high-quality industrial space from supply chain users, and the availability of Class A product continues to decline in most locations.
There is an increased emphasis on speed-to-market delivery schemes, with e-commerce continuing to transform distribution networks. Big-box distribution centers are no longer the only focal point among tenants and retailers.
Light distribution facilities located near or within major metros are growing more popular with users seeking to meet consumer demand for same- and next-day delivery of goods.
Rents in this segment have risen significantly in some areas, especially in infill submarkets that are well positioned to serve the urban core, according to the report.
Of the 68 global hubs tracked in the report, 59 percent (40 markets) recorded an annual increase in prime rents, 25 percent (17 markets) experienced no change, and only 16 percent (11 markets) saw decreases in prime rents.
— Christina Cannon