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U.S. industrial market on pace for strongest demand since 2005; rents near all-time high

U.S. Industrial & Logistics, Q3 2016

  • With an impressive 204.3 million sq. ft. of total net absorption year-to-date, 2016 is on pace to be the strongest year for industrial leasing demand since 2005. Net absorption of 77.4 million sq. ft. in Q3 2016 marked the 26th consecutive quarter of positive user demand—the longest such streak in more than 20 years.

  • Development growth has been steady in response to the robust user demand, particularly in the Class A segment. The third quarter had 54.5 million sq. ft. of new development completed—the most since Q4 2008—with an additional 184 million sq. ft. under construction.

  • Tight supply pushed rents up in many core markets, with growth averaging 1.8% for the quarter and 6.9% year-over-year to $6.06 per sq. ft. —surpassing the previous high set in 2008. An additional 1.3% is forecast for the balance 2016, which would mark a fifth consecutive year of rent growth and would push net rents to an all-time high.

  • Industrial investment in Q3 2016 totalled $14 billion, exceeding the year-earlier level by 3.4%and rising modestly from earlier quarters in 2016.

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