Under construction inventory deemed “essential” in 16 of top 20 US industrial markets
Dallas – April 28, 2020 – Despite economic disruptions caused by COVID-19, industrial construction is continuing in Dallas-Fort Worth and the majority of major U.S. markets, according to a new CBRE report.
Dallas-Fort Worth led the country with more than 23 million square feet of industrial space under construction at the end of 2019. As of the end of Q1 that number had increased slightly to 23,870,251 square feet of DFW industrial projects in the construction pipeline with a pre-leased rate of 19.3%. The Metroplex also had the nation’s highest absorption of industrial space in Q1, 6.2 million square feet, showing the demand for industrial space in DFW had not let up.
CBRE’s analysis found that construction has been deemed “essential” in 16 of the top 20 markets with industrial properties under construction. Only the I-78/81 Corridor, Philadelphia, Central New Jersey, and Oakland have shut down industrial construction. However, in New Jersey and Pennsylvania waivers can be granted distribution centers that will warehouse essential products.
Speculative construction projects have largely been put on hold as well, which will create a lack of first-generation space hitting the market in 2021. The lack of inventory growth could lower the overall vacancy rate back to pre-COVID levels in the latter part of 2021, assuming that business activity rebounds by the end of this year.
While construction continues, project timelines have been delayed and extended due to such challenges as completing onsite inspections, reduced construction crews due to social distancing guidelines and delays in procuring and transporting construction materials.
“Construction challenges remain in this market, but overall the pipeline is solid, showcasing the enduring demand for warehouse and distribution facilities,” said James Breeze, Senior Director, Global Head of Industrial & Logistics Research for CBRE. “Leasing activity may slow down in the near term, but a third of under construction product is already leased. Because of this strong pre-leasing, we expect to see only a moderate increase in vacancy rates in the coming quarters.“
To download the report, click here.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
