US industrial construction climbs to a 10-year high
- Activity in the industrial sector across the U.S. is at a 10-year high, according to The Wall Street Journal.
- Real estate firm JLL reported that 247 million square feet of industrial space will be delivered this year, while rents and vacancies also maintain their favorable record levels.
- A separate CBRE report, according to DC Velocity, found that of the 72 million square feet of warehouse and distribution space currently under construction, 43% is pre-committed, which is the highest rate since 2000.
Despite predicting a general slowdown in 2017 construction growth in a late-2016 report, JLL noted that the industrial sector had seen its lowest vacancy rates in 16 years and that 18% of third-quarter 2016 leases were for newly built space.
E-commerce companies are largely driving the demand for built-to-suit, high-performance distribution centers, often with special features. JLL said construction of these types of properties increased 29% in the first quarter of 2017 when compared to the fourth quarter of 2016.
In fact, a National Real Estate Investor report released late last year found that the e-commerce sector was the driving force behind the almost 100 big-box warehouse construction projects, which totaled a record-breaking 60 million square feet completed in 2015.
A 2016 Colliers international report also found that while online sales only comprised approximately 10% of all U.S. sales, they were growing at a rate of five times that of brick-and-mortar locations, a trend that resulted in the doubling of speculative big-box construction from 2009 to 2015.
Other factors favorable to the industrial sector include increased sustainable energy production, an uptick in the number of states with legalized marijuana and an increase in global trade.
- DC Velocity Pre-commitments for warehouse, DC space at highest level since 2000, report says
- The Wall Street Journal Industrial Real Estate Gains Momentum on Strong Appetite for Space
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