WASHINGTON, D.C. — Even in the face of economic turbulence in the general U.S. economy caused by cold weather and labor issues in West Coast ports, the country’s industrial sector remained unfazed and continued its growth during the first quarter of 2015, according to a report from real estate services firm DTZ.
The U.S. industrial sector saw net absorption of 38.8 million square feet — almost identical to the previous quarter’s number, and a 20.5 percent year-over-year increase.
“Since 1993 — the first year DTZ started tracking quarterly data — there has never been stronger demand as there is currently,” DTZ writes in the report. “Over the past four quarters, more than 169 million square feet of industrial space have been absorbed.”
Vacancy, meanwhile, continued its years-long free-fall, hitting 7.6 percent. That’s 10 basis points down from fourth-quarter 2014, 60 basis points lower than the same time last year, and 110 basis points below the 25-year average of 8.7 percent.
Asking rents increased to $5.35 per square foot triple net and are now 4 percent higher than in the first quarter of 2014, despite delivery of 35.8 million square feet of new space.
There is 107.3 million square feet of industrial space under construction, a 9.1 percent increase from the first quarter last year. DTZ estimates the market could absorb that space in under three quarters with the current high demand.
The report remains bullish on the future, suggesting that any concerns about overheating in the market have no evidence to support them.
“The industrial market stands to have another one of its best years ever in 2015,” DTZ writes in the report. “We anticipate the trends in rental rate growth to continue and spread to more markets throughout the remainder of the year.”
— Jeff Shaw