Reis Chief Economist and Vice President of Research Victor Calanog provides the Reis assessment of Q2 2017 Industrial Sector trends. Highlights include:
- Industrial fundamentals were on a tear during Q2 2017
- National vacancies for warehouse distribution sub-sector were 9.7%, down 20 basis points for the quarter and 60 basis points for the year
- Flex sub-sector vacancies were 10.5%, slightly higher than warehouse distribution centers, having falled 30 basis points in the quarter quarter and 100 basis points – a full percentage point – during the year
- Asking and effective rents increases .7% and .8%, effectively, during the quarter, for warehouse distribution centers
- The flex sub-sector rent growth matched this with a .7% increase in asking rents and a .8% increase in effective rents
- Year over year rent growth rate for both warehouse distribution centers and flex space was in the mid 2s (percent)
- Developers are rapidly bringing new product to meet the attractive fundamentals
- Difficult to project with short time to delivery, but anticipate 1 million square feet of warehouse distribution space will be added this year alone
- New supply not expected to tank fundamentals given strength of demand
- What ails retail is bolstering the prospects of industrial space, especially warehouse distribution