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Home » CBRE: New warehouse construction caught up to hot demand in fourth quarter
Forward Thinking

CBRE: New warehouse construction caught up to hot demand in fourth quarter

January 15, 2018
Supply Chain Quarterly Staff
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The supply of new U.S. warehouse space finally caught up to hot demand fueled by the rise of e-commerce, thanks to a surge of industrial real estate development during the fourth quarter of 2016, CBRE Group Inc., the Los Angeles-based real estate and logistics services giant, said Friday.

The demand for warehouse and distribution center space has outpaced new supply for several years, as companies frantically expanded their networks for e-commerce distribution, CBRE said. That trend led to such low availability rates that renters in some markets couldn't find available industrial space, the firm said.

However, the gap between supply and demand finally closed during the fourth quarter of 2017, after developers delivered 52 million square feet of new warehouse space while users moved into just 44 million square feet, according to CBRE figures. That pushed the availability rate for warehouse space across the 51 U.S. markets tracked by CBRE up to 7.39 percent, a slight increase over the 7.35 percent rate in the fourth quarter of 2016, CBRE said. The availability rate represents the proportion of housing stock that is physically available on the market at a particular point in time.

During the full year of 2017, developers opened 197 million square feet of new warehouse space, while renters moved into 176 million square feet of space.

"This equilibrium in the market will benefit industrial users, who should find a few more options in various markets for their expansion needs," Richard Barkham, CBRE's global chief economist, said in a statement. "The underlying conditions for this sector remain decidedly healthy, with demand still robust and the supply pipeline vibrant."

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