By Andrea Waitrovich
Strength in industrial and logistics markets throughout the Americas continued during second quarter 2016, according to CBRE’s “Americas Industrial and Logistics Trends Report.”
The United States saw the vacancy rate and availability rate drop by 20 basis points to 5.2 percent and 8.7 percent, respectively. During the first half of the year, six U.S. metropolitan markets each attracted at least $1 billion in investment capital. Los Angeles was number one, followed by San Francisco, New York City, Chicago, Boston, and Dallas/Fort Worth. Investment in these six markets together represented 48 percent of the U.S. total.
A survey of CBRE brokers revealed user demand in most markets is driven by e-commerce, third-party logistics, consumer goods, auto parts suppliers and food/beverage tenants. Smaller-sized deals have become more common as e-commerce and supply chain users look for smaller light industrial spaces situated in densely populated areas to meet demand.
U.S. industrial development remained steady during second quarter 2016, with 41.6 million square feet added. Full-year 2016 is expected to end with 185.3 million square feet of added space.
Canada’s industrial market are expected to remain divided between Toronto/Vancouver and the remaining markets. Toronto and Vancouver continue to achieve record low availability rates, at 3.7 percent and 3.6 percent, respectively, while Calgary, Edmonton and Halifax reached record high availability rates during the second quarter. Similarly, Toronto and Vancouver together had a total of 4.4 million square feet of positive net absorption in second quarter 2016, while the remaining markets collaboratively posted 3.3 million square fee of negative net absorption. Transportation and warehousing are expected to remain the most active industries alongside a growing e-commerce market in Canada.
Latin America has seen a similar pattern, with the core Mexican markets showing strong user demand and positive fundamentals, while Brazilian markets, hit by a recession, have experienced a fall in demand and fundamentals.