Demand from e-coms raises the roof on warehouse rates
The mad dash to provide same-day delivery on the part of e-commerce players like Amazon is sapping warehouse space in the U.S. As a result, retailers should budget for higher leasing rates in the year ahead.
According to a report from CBRE, industrial warehouse space has reached its lowest level since 2001. Availability dropped 8.8% in the second quarter as 37 of 57 major markets registered declines.
“While we’ve had some shocks to the global economy, the U.S. economy still is moving along at a slow and steady space, and that will sustain industrial demand,” said Jeffrey Havsy, CBRE’s chief economist for the Americas. “Retail sales have been above expectations, posting pretty strong gains in April and May.”
Thirteen of the 57 markets posted increases in availability, owing mostly to new construction. They included Houston, Cincinnati, Denver, Minneapolis, California’s Inland Empire, South Central Pennsylvania, Cleveland, and Honolulu.
CBRE expected new warehouse construction in 2016 to be the same as last year — about 150 million sq. ft. That would fall markedly short of the 10-year high of 213.5 million sq. ft. delivered in 2006.
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