Industrial & Logistics Market Stable;
Vacancy Remains at Record Low

  • The U.S. industrial & logistics (I&L) sector remained balanced in Q1, with 31.6 million sq. ft. absorbed versus 33.2 million sq. ft. delivered.
  • The overall market’s availability rate remained at 7.0%—the lowest level since Q4 2000. The vacancy rate remained at 4.3%, maintaining its lowest level since CBRE began tracking this metric in 2002.
  • The 33.2 million sq. ft. of new supply delivered in Q1 was down 48.6% quarter-over-quarter and 20.5% year-over-year. This confirms the discipline shown by developers and the low risk of late-cycle oversupply.
  • The under-construction pipeline grew 4.6% quarter-over-quarter to 283.1 million sq. ft., another indication of stability on the supply side.
  • Although supply and demand were in balance, net asking rents increased 2.2% in Q1 to $7.51 per sq. ft. —the highest level since CBRE began tracking the metric in 1989. Rents have increased 8.1% year-over-year, the highest growth rate in this cycle and well above the average annual growth rate of 4.4% since 2012.
  • GDP growth is forecast to fall to 2.4% in 2019 from 2.9% last year. Nevertheless, a still-robust labor market and rising wages will continue to be a primary driver of overall economic growth and demand for industrial space.
  • The continued strength of the U.S. dollar, rising nominal incomes and low inflation will likely lead to more imported goods, which bodes well for the industrial sector. Each dollar increase in imports consumes three times more warehouse space than each dollar increase in exports.