Q2 2018 U.S. INDUSTRIAL & LOGISTICS FIGURES
Q2 2018 U.S. INDUSTRIAL & LOGISTICS FIGURES EXECUTIVE SUMMARY DEMAND AGAIN OUTSTRIPS NEW SUPPLY, RENTS TICK UP FURTHER Availability Rate 7.2% Vacancy Rate 4.4% Net Asking Rent $7.11 PSF Net Absorption 58.8 MSF Completions 48.9 MSF Arrows indicate change from previous quarter. The U.S. industrial & logistics (I&L) sector continued to demonstrate strong fundamentals in Q2, with 58.8 million sq. ft. absorbed versus 48.9 million sq. ft. delivered. The overall market s availability rate declined 10 basis points from the previous quarter to 7.2% the lowest level since Q4 2000. This marked the 33rd consecutive quarter of positive net absorption the longest streak since before 2001. The new supply of 48.9 million sq. ft. that was delivered in Q2 was up 17.8% over the previous quarter and 7.5% over Q2 2017. Deliveries year-to-date are in line with 2017, as new supply comes online at a steady pace. The underconstruction pipeline of 260.0 million sq. ft. in Q2 was up 6.5% over the previous quarter, which suggests that new-supply levels should grow over the next year, albeit at a moderate rate. With demand exceeding new supply, net asking rents increased 1.7% in Q2 to $7.11 per sq. ft. the highest level since CBRE began tracking the metric in 1989. Rents increased 5.5% year-over-year, exceeding the average annual growth rate of 4.1% since 2012. The major drivers of supply-chain demand consumer spending, business inventories and industrial production all showed measured growth in Q2. As expected with such strong consumer sentiment, spending rates have hit their highest levels since the 2008 recession. This is especially positive for the I&L market, as consumer spending is highly correlated to demand for warehouse and logistics real estate. 2 U.S. INDUSTRIAL & LOGISTICS Q2 2018 FIGURES
FIGURE 1 CONSUMER CONFIDENCE RISING AS UNEMPLOYMENT PLUMMETS 100 95 90 85 80 75 70 65 60 55 50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 10 9 8 7 6 5 4 3 Consumer Sentiment Index (L) Unemployment Rate % (R) Note: 2018 figures are through July. Source: Federal Reserve Bank of St. Louis, July 2018. 3 U.S. INDUSTRIAL & LOGISTICS Q2 2018 FIGURES
FIGURE 2 U.S. SUPPLY CHAIN INDICATORS Q1 2008 = 100 150 140 130 120 110 100 90 80 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Industrial Production Consumer Consumption Business Inventories Source: Federal Reserve Bank of St. Louis, May 2018. 4 U.S. INDUSTRIAL & LOGISTICS Q2 2018 FIGURES
Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 FIGURE 3 POSITIVE NET ABSORPTION STREAK EXTENDS RECORD Net Absorption (MSF) 120 Net Absorption Avg. Over Streak 100 80 60 40 20 0 Source: CBRE Econometric Advisors, Q2 2018. 5 U.S. INDUSTRIAL & LOGISTICS Q2 2018 FIGURES
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 FIGURE 4 U.S. INDUSTRIAL SUPPLY AND DEMAND Completions and Net Absorption (MSF) Completions (L) Net Absorption (L) Availability Rate (R) Availability Rate (%) 120 14 100 12 80 60 40 20 10 8 6 4 2 0 0 Source: CBRE Econometric Advisors, Q2 2018. 6 U.S. INDUSTRIAL & LOGISTICS Q2 2018 FIGURES
FIGURE 5 LOWEST AND HIGHEST AVAILABILITY RATES (%) Lowest Availability Rates Savannah 2.9 Cincinnati 3.7 Detroit 3.8 Oakland & San Francisco Peninsula 4.0 Los Angeles 4.3 Highest Availability Rates San Antonio 13.2 Baltimore 12.2 Austin 11.3 Boston & Greenville 11.0 El Paso & Memphis 10.0 Source: CBRE Research, Q2 2018. 7 U.S. INDUSTRIAL & LOGISTICS Q2 2018 FIGURES
FIGURE 6 LARGEST QUARTERLY CHANGES IN AVAILABILITY RATES (BPS) Largest Decreases in Availability Reno -130 El Paso -100 Boston -80 Austin, Jacksonville & Palm Beach -70 Ft. Lauderdale & Houston -60 Largest Increases in Availability Central Valley, CA & Walnut Creek/I-680 Corridor 210 Charleston 90 Baltimore, Greenville, Pennsylvania/I-78/81 Corridor & Seattle 80 Salt Lake City, San Antonio & San Diego 60 Central New Jersey & Denver 50 Source: CBRE Research, Q2 2018. 8 U.S. INDUSTRIAL & LOGISTICS Q2 2018 FIGURES
Q2 2007 Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 Q4 2010 Q2 2011 Q4 2011 Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018 FIGURE 7 U.S. INDUSTRIAL RENT GROWTH Year-over-Year (%) 8 6 4 2 0-2 -4-6 -8-10 Source: CBRE Econometric Advisors, Q2 2018. 9 U.S. INDUSTRIAL & LOGISTICS Q2 2018 FIGURES
FIGURE 8 U.S. INDUSTRIAL AVAILABILITY RATES (%) *Suburban Maryland and Northern Virginia represent Washington, D.C. area. **NNN asking rates are displayed on a per sq. ft. and per annum basis. Source: U.S. national figures provided by CBRE Econometric Advisors, all other figures compiled by CBRE Research, Q2 2018. 10 U.S. INDUSTRIAL & LOGISTICS Q2 2018 FIGURES
FIGURE 8 U.S. INDUSTRIAL AVAILABILITY RATES (%) (CONTINUED) **NNN asking rates are displayed on a per sq. ft. and per annum basis. Source: U.S. national figures provided by CBRE Econometric Advisors, all other figures compiled by CBRE Research, Q2 2018. 11 U.S. INDUSTRIAL & LOGISTICS Q2 2018 FIGURES
FOR MORE INFORMATION, PLEASE CONTACT: Adam Mullen Senior Managing Director Industrial & Logistics Services, Americas +1 404 923 1414 adam.mullen@cbre.com Spencer G. Levy Americas Head of Research & Senior Economic Advisor +1 617 912 5236 spencer.levy@cbre.com Follow Spencer on Twitter: @SpencerGLevy David Egan Global Head of Industrial & Logistics Research +1 312 935 1892 david.egan2@cbre.com Follow David on Twitter: @Egan2David Nikhil Mohan Economist +1 617 912 5209 nikhil.mohan@cbre.com Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your r esponsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
Q1 2018 U.S. INDUSTRIAL & LOGISTICS FIGURES
Q1 2018 U.S. INDUSTRIAL & LOGISTICS FIGURES EXECUTIVE SUMMARY DEMAND OUTPACES NEW SUPPLY, PUSHING RENTS TO ALL-TIME HIGHS Availability Rate 7.3% Vacancy Rate 4.5% Net Asking Rent $7.01 PSF Net Absorption 41.0 MSF Completions 35.0 MSF Arrows indicate change from previous quarter. After a brief period of supply and demand parity, demand in the U.S. industrial market once again outpaced new supply in Q1 2018. With 41.0 million sq. ft. absorbed versus 35.0 million sq. ft. delivered, the market s availability rate declined to 7.3% the lowest level since Q1 2001. This marked the 32nd consecutive quarter of positive net absorption the longest streak in almost 20 years. The new supply of 35.0 million sq. ft. that was delivered in Q1 was down 44.9% over the previous quarter and 26.6% over Q1 2017. The under-construction pipeline of 244.5 million sq. ft. in Q1 was up 3.7% over the previous quarter, which suggests that the near-term delivery figures should be at or slightly larger than the most recent quarters. With demand exceeding new supply, net asking rents increased 1.9% in Q1 to $7.01 per sq. ft. the highest level since CBRE began tracking the metric in 1989. Rents increased 5.9% year-over-year, well above the average 12-month growth of 3.8% during this cycle (dating back to Q4 2011 when rents resumed growth). The major drivers of supply chain demand consumer consumption, business inventories and industrial production all showed measured growth in Q1. The U.S. unemployment rate was 4.1% its lowest level in 17 years. With the fastest wage growth since 2009, consumer confidence has stayed near its highest level since 2004. As expected with such strong consumer sentiment, consumption rates have hit their highest levels since the 2008 recession. This is especially positive for the industrial market, as consumer consumption is highly correlated to demand for warehouse and logistics real estate. 2 U.S. INDUSTRIAL & LOGISTICS Q1 2018 FIGURES
FIGURE 1 TIGHT LABOR MARKET GENERATES CONSUMER CONFIDENCE 100 95 90 85 80 75 70 65 60 55 50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 10 9 8 7 6 5 4 3 Consumer Sentiment Index (L) Unemployment Rate % (R) Note: 2018 figures are through April. Source: Federal Reserve Bank of St. Louis, April 2018. 3 U.S. INDUSTRIAL & LOGISTICS Q1 2018 FIGURES
FIGURE 2 U.S. SUPPLY CHAIN INDICATORS Q1 2008 = 100 150 140 130 120 110 100 90 80 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Industrial Production Consumer Consumption Business Inventories Source: Federal Reserve Bank of St. Louis, February 2018. 4 U.S. INDUSTRIAL & LOGISTICS Q1 2018 FIGURES
FIGURE 3 POSITIVE NET ABSORPTION STREAK EXTENDS RECORD Net Absorption (MSF) 120 Net Absorption Avg. Over Streak 100 80 60 40 20 0 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Source: CBRE Econometric Advisors, Q1 2018. 5 U.S. INDUSTRIAL & LOGISTICS Q1 2018 FIGURES
FIGURE 4 U.S. INDUSTRIAL SUPPLY AND DEMAND Completions and Net Absorption (MSF) Completions (L) Net Absorption (L) Availability Rate (R) Availability Rate (%) 120 14 100 12 80 10 8 60 6 40 4 20 2 0 0 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Source: CBRE Econometric Advisors, Q1 2018. 6 U.S. INDUSTRIAL & LOGISTICS Q1 2018 FIGURES
FIGURE 5 LOWEST AND HIGHEST AVAILABILITY RATES (%) Lowest Availability Rates Savannah 3.3 Detroit 3.8 Oakland 3.9 Cincinnati 4.0 San Francisco Peninsula 4.2 Highest Availability Rates San Antonio 12.6 Austin 12.0 Boston 11.8 Baltimore 11.4 El Paso 11.0 Source: CBRE Research, Q1 2018. 7 U.S. INDUSTRIAL & LOGISTICS Q1 2018 FIGURES
FIGURE 6 LARGEST QUARTERLY CHANGES IN AVAILABILITY RATES (BPS) Lowest Availability Rates Savannah -360 Charleston -180 Tucson -130 Central Valley, CA -110 Cincinnati, Greenville, Jacksonville & Orlando -80 Highest Availability Rates Boston 150 Reno 110 Austin & Norfolk 100 Richmond & San Francisco Peninsula 70 Louisville 60 Source: CBRE Research, Q1 2018. 8 U.S. INDUSTRIAL & LOGISTICS Q1 2018 FIGURES
FIGURE 7 U.S. INDUSTRIAL RENT GROWTH Year-over-Year (%) 8 6 4 2 0-2 -4-6 -8-10 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 Source: CBRE Econometric Advisors, Q1 2018. 9 U.S. INDUSTRIAL & LOGISTICS Q1 2018 FIGURES
FIGURE 8 U.S. INDUSTRIAL AVAILABILITY RATES (%) NNN Asking Rate ($)** Vacancy Rate (%) Availability Rate (%) Market Size Rank Q1 2018 Q1 2018 Q1 2018 Q4 2017 Q1 2017 Baltimore 33 6.24 6.7 11.4 11.6 11.7 Boston 34 7.85 7.5 11.8 10.3 10.7 Charleston 54 5.50 5.2 8.2 10.0 9.3 Charlotte 27 6.47 4.6 5.0 5.0 4.8 Greenville 31 3.29 6.6 10.2 11.0 10.4 Hartford 49 5.07 8.8 9.0 9.3 8.6 Louisville 40 3.65 7.2 8.2 7.6 8.2 Suburban Maryland* 47 9.17 6.5 9.2 9.7 11.7 Central New Jersey 9 6.20 3.3 5.9 6.1 6.7 Northern New Jersey 10 7.49 4.3 7.8 7.3 7.4 Norfolk 48 4.77 4.8 7.0 6.0 7.8 Pennsylvania/I-78/81 Corridor 8 4.52 5.9 7.4 7.5 8.0 Philadelphia 12 5.46 5.9 8.0 8.0 8.8 Pittsburgh 36 5.68 7.7 9.5 9.6 10.1 Richmond 42 4.88 3.7 6.9 6.2 7.5 Northern Virginia* 50 11.07 6.9 9.7 9.8 10.9 East 5.6 8.0 8.0 8.4 Chicago 1 4.92 3.6 5.4 6.0 6.1 Cincinnati 14 4.18 3.8 4.0 4.8 4.0 Cleveland 15 4.67 4.5 5.3 5.5 6.8 Columbus 20 3.70 4.0 5.3 5.4 6.8 Detroit 6 6.35 2.0 3.8 4.0 4.8 Indianapolis 17 4.24 5.0 6.2 6.3 7.1 Kansas City 16 4.50 5.8 7.3 7.5 7.9 Milwaukee 21 4.16 4.2 5.0 5.7 6.1 Minneapolis/St. Paul 11 5.75 4.6 6.5 6.3 7.0 St. Louis 25 4.58 4.9 7.1 7.1 6.3 Midwest 4.0 5.4 5.8 6.2 United States 4.5 7.3 7.4 7.5 *Suburban Maryland and Northern Virginia represent Washington, D.C. area. **NNN asking rates are displayed on a per sq. ft. and per annum basis. Source: U.S. national figures provided by CBRE Econometric Advisors, all other figures compiled by CBRE Research, Q1 2018. 10 U.S. INDUSTRIAL & LOGISTICS Q1 2018 FIGURES
FIGURE 8 U.S. INDUSTRIAL AVAILABILITY RATES (%) (CONTINUED) NNN Asking Rate ($)** Vacancy Rate (%) Availability Rate (%) Market Size Rank Q1 2018 Q1 2018 Q1 2018 Q4 2017 Q1 2017 Atlanta 4 4.74 6.8 8.3 8.9 9.0 Austin 55 9.87 10.8 12.0 11.0 9.0 Dallas/Ft. Worth 3 4.14 5.8 8.2 8.7 9.1 El Paso 53 4.05 7.9 11.0 10.8 10.7 Ft. Lauderdale 45 8.53 3.8 7.2 6.9 8.3 Houston 5 4.80 5.2 7.8 8.1 8.8 Jacksonville 43 4.76 3.5 8.8 9.6 11.7 Memphis 23 3.25 7.1 9.8 9.7 10.7 Miami 26 6.69 3.6 7.2 7.1 6.8 Nashville 30 4.70 7.6 9.6 9.4 9.0 Orlando 41 6.35 5.6 9.0 9.8 10.6 Palm Beach 56 9.33 2.8 7.1 7.2 7.3 San Antonio 57 5.37 9.8 12.6 12.6 12.7 Savannah 52 4.20 1.2 3.3 6.9 4.7 Tampa 37 5.75 4.8 8.8 8.7 9.7 South 5.8 8.4 8.7 9.1 Albuquerque 58 6.89 6.2 7.0 7.0 7.9 Central Valley, CA 44 4.68 2.1 5.7 6.8 4.6 Denver 24 7.96 6.0 8.3 8.2 8.6 Inland Empire 7 6.36 3.6 6.7 6.6 6.8 Las Vegas 39 6.96 3.9 5.2 5.5 5.9 Los Angeles 2 9.72 1.3 4.5 4.5 3.7 Oakland 35 10.44 1.3 3.9 3.6 3.1 Orange County 19 10.68 1.5 4.3 4.6 3.1 Phoenix 13 7.68 6.7 8.5 8.6 10.1 Portland 28 5.96 3.8 5.3 4.8 4.1 Reno 46 4.44 3.4 8.1 7.0 7.7 Sacramento 32 6.60 5.4 8.6 8.8 9.5 Salt Lake City 38 5.72 3.1 4.7 4.7 6.2 San Diego 29 12.84 4.0 6.8 7.0 7.7 San Francisco Peninsula 51 31.73 1.5 4.2 3.5 3.3 San Jose 22 20.11 5.9 7.5 7.8 7.8 Seattle 18 10.38 3.9 4.7 5.2 5.1 Tucson 59 5.88 7.5 8.0 9.3 11.6 Walnut Creek/I-680 Corridor 60 11.76 1.0 6.1 5.6 3.9 West 3.4 5.9 6.0 5.9 United States 4.5 7.3 7.4 7.5 **NNN asking rates are displayed on a per sq. ft. and per annum basis. Source: U.S. national figures provided by CBRE Econometric Advisors, all other figures compiled by CBRE Research, Q1 2018. 11 U.S. INDUSTRIAL & LOGISTICS Q1 2018 FIGURES
FOR MORE INFORMATION, PLEASE CONTACT: Adam Mullen Senior Managing Director Industrial & Logistics Services, Americas +1 404 923 1414 adam.mullen@cbre.com David Egan Global Head of Industrial & Logistics Research +1 312 935 1892 david.egan2@cbre.com Follow David on Twitter: @Egan2David Spencer G. Levy Americas Head of Research & Senior Economic Advisor +1 617 912 5236 spencer.levy@cbre.com Follow Spencer on Twitter: @SpencerGLevy Nikhil Mohan Economist +1 617 912 5209 nikhil.mohan@cbre.com Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
Q4 2017 U.S. INDUSTRIAL & LOGISTICS FIGURES
Q4 2017 U.S. INDUSTRIAL & LOGISTICS FIGURES EXECUTIVE SUMMARY INDUSTRIAL MARKET REACHES SUPPLY/DEMAND BALANCE Availability Rate 7.4% Vacancy Rate 4.5% Net Asking Rent $6.92 PSF Net Absorption 44.4 MSF Completions 51.7 MSF Arrows indicate change from previous quarter. While demand did not keep pace with new supply delivered in Q4 2017, full-year demand did exceed total new deliveries in 2017. The industrial market s availability rate remained steady for the sixth consecutive quarter at 7.4% the lowest level since Q1 2001. Net absorption totaled 44.4 million sq. ft. in Q4, marking 31 consecutive quarters of positive demand. Total net absorption for the year exceeded 200 million sq. ft. for the fifth year in a row. The five-year average of 256.9 million sq. ft. is the most since CBRE began tracking the stat in 1989. New supply totaling 51.7 million sq. ft. was delivered in Q4, on par with the previous quarter. The 2017 total of 195.3 million sq. ft. was up 2.0% over 2016 and was the largest delivery total of this cycle. The under-construction pipeline of 236.8 million sq. ft. in Q4 was up 2.2% over the previous quarter, which suggests that the near-term delivery figures should be in line with the most recent quarters. Though supply and demand are in balance, net asking rents still grew slightly (0.6%) in Q4 to $6.92 per sq. ft. Rent growth for the year was strong at 5.3%. Asking rents reached an all-time high in Q3 2016 and have set a new record in each subsequent quarter. The major drivers of industrial demand consumer consumption and manufacturing were both well-positioned at year s end. The U.S. unemployment rate was 4.1%, its lowest level in 17 years. With consumers expectation for future wage growth at its highest point in three years, consumer confidence has risen to its highest level since 2004. With rising consumption, industrial production reached the highest point on record in December. NOTE: One of our data suppliers is performing a multi-quarter cleanup of their data in order to remove listings that have contributed to an artificially high availability rate. At odds are the number of transactions reported as being closed in 2016 that were included in 2017 data. This had the effect of lowering the availability rate in prior quarters and leaving less available space to be absorbed in 2017. With the revision, net absorption for 2016 was revised up to 307 million sq. ft. from 286 million sq. ft. and for 2017 was revised down to 176 million sq. ft. from 202 million sq. ft. Although for this report we have used the unadjusted figures, updated charts are available upon request. CBRE will make longer-term changes to improve our data process as part of the firm s commitment to better enablement technologies. 2 U.S. INDUSTRIAL & LOGISTICS Q4 2017 FIGURES
FIGURE 1 TIGHT LABOR MARKET GENERATES CONSUMER CONFIDENCE 100 95 90 85 80 75 70 65 60 55 50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 10 9 8 7 6 5 4 3 Consumer Sentiment Index (L) Unemployment Rate % (R) Source: Federal Reserve Bank of St. Louis, November 2017. 3 U.S. INDUSTRIAL & LOGISTICS Q4 2017 FIGURES
FIGURE 2 STRONG CONSUMPTION SPURS GROWTH IN PRODUCTION Industrial Production Index (2012=100) 110 105 100 95 90 85 80 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Industrial Production Source: Federal Reserve Bank of St. Louis, December 2017. 4 U.S. INDUSTRIAL & LOGISTICS Q4 2017 FIGURES
FIGURE 3 POSITIVE NET ABSORPTION STREAK EXTENDS RECORD Net Absorption (MSF) 100 90 80 70 60 50 40 30 20 10 0 Net Absorption Avg. Over Streak Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Source: CBRE Econometric Advisors, Q4 2017. 5 U.S. INDUSTRIAL & LOGISTICS Q4 2017 FIGURES
FIGURE 4 U.S. INDUSTRIAL SUPPLY AND DEMAND Completions and Net Absorption (MSF) Completions (L) Net Absorption (L) Availability Rate (R) Availability Rate (%) 100 14 90 80 12 70 10 60 50 40 8 6 30 4 20 10 2 0 0 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Source: CBRE Econometric Advisors, Q4 2017. 6 U.S. INDUSTRIAL & LOGISTICS Q4 2017 FIGURES
FIGURE 5 LOWEST AND HIGHEST AVAILABILITY RATES (%) Lowest Availability Rates San Francisco Peninsula 3.5 Oakland 3.6 Detroit 4.0 Los Angeles 4.5 Orange County 4.6 Highest Availability Rates San Antonio 12.6 Baltimore 11.6 Austin & Greenville 11.0 El Paso 10.8 Boston 10.3 Source: CBRE Research, Q4 2017. 7 U.S. INDUSTRIAL & LOGISTICS Q4 2017 FIGURES
FIGURE 6 LARGEST QUARTERLY CHANGES IN AVAILABILITY RATES (BPS) Largest Decreases in Availability Reno -160 Ft. Lauderdale -150 Oakland -130 Jacksonville -120 Savannah -110 Largest Increases in Availability Central Valley, CA 230 Charleston & El Paso 100 Austin & Orange County 80 Sacramento & Milwaukee 70 Hartford & St. Louis 60 Source: CBRE Research, Q4 2017. 8 U.S. INDUSTRIAL & LOGISTICS Q4 2017 FIGURES
FIGURE 7 U.S. INDUSTRIAL RENT GROWTH Year-over-Year (%) 8 6 4 2 0-2 -4-6 -8-10 Q2 2007 Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 Q4 2010 Q2 2011 Q4 2011 Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Source: CBRE Econometric Advisors, Q4 2017. 9 U.S. INDUSTRIAL & LOGISTICS Q4 2017 FIGURES
FIGURE 8 U.S. INDUSTRIAL AVAILABILITY RATES (%) NNN Asking Rate ($)** Vacancy Rate (%) Availability Rate (%) Market Size Rank Q4 2017 Q4 2017 Q4 2017 Q3 2017 Q4 2016 Baltimore 33 6.29 6.9 11.6 12.0 11.8 Boston 34 7.67 7.7 10.3 10.0 11.1 Charleston 54 5.29 6.4 10.0 9.0 9.5 Charlotte 26 6.47 4.6 5.0 4.8 4.9 Greenville 31 3.31 6.8 11.0 10.7 11.3 Hartford 49 5.15 8.8 9.3 8.7 9.5 Louisville 40 3.58 7.1 7.6 8.5 7.8 Suburban Maryland* 47 8.87 7.3 9.7 10.7 10.9 Central New Jersey 8 5.82 3.3 6.1 6.1 6.5 Northern New Jersey 9 7.32 4.3 7.3 7.5 7.5 Norfolk 48 4.77 4.5 6.6 7.0 7.3 Pennsylvania/I-78/81 Corridor 12 4.34 6.1 7.5 7.2 7.0 Philadelphia 29 4.47 5.5 7.2 7.3 9.7 Pittsburgh 36 5.54 7.7 9.6 9.8 10.2 Richmond 42 4.86 3.4 6.2 6.8 7.8 Northern Virginia* 50 11.04 6.4 9.8 10.1 11.4 East 5.5 7.9 8.0 8.5 Chicago 1 4.89 4.1 6.0 6.6 6.0 Cincinnati 13 4.09 4.4 4.8 4.8 5.1 Cleveland 14 4.68 4.7 5.5 5.5 6.4 Columbus 20 3.50 3.5 5.4 6.0 7.2 Detroit 6 6.05 2.1 4.0 4.3 5.3 Indianapolis 16 4.15 5.1 6.3 6.4 6.7 Kansas City 15 4.53 5.7 7.5 7.7 8.3 Milwaukee 19 4.15 4.2 5.7 5.0 6.2 Minneapolis/St. Paul 10 5.62 4.5 6.3 6.3 6.9 St. Louis 24 4.74 5.1 7.1 6.5 7.1 Midwest 4.2 5.8 6.0 6.3 United States 4.5 7.4 7.4 7.4 * Suburban Maryland and Northern Virginia represent Washington, D.C. area. **NNN asking rates are displayed on a per sq. ft. and per annum basis. Source: U.S. national figures provided by CBRE Econometric Advisors, all other figures compiled by CBRE Research, Q4 2017. 10 U.S. INDUSTRIAL & LOGISTICS Q4 2017 FIGURES
FIGURE 8 U.S. INDUSTRIAL AVAILABILITY RATES (%) (CONTINUED) NNN Asking Rate ($)** Vacancy Rate (%) Availability Rate (%) Market Size Rank Q4 2017 Q4 2017 Q4 2017 Q3 2017 Q4 2016 Atlanta 4 4.58 7.3 8.9 9.1 10.2 Austin 55 10.15 9.9 11.0 10.2 8.9 Dallas/Ft. Worth 3 4.01 6.4 8.7 8.5 9.0 El Paso 52 4.03 7.5 10.8 9.8 10.1 Ft. Lauderdale 45 8.48 3.7 6.9 8.4 8.0 Houston 5 4.80 5.4 8.1 8.6 8.7 Jacksonville 43 4.47 3.9 9.6 10.8 11.9 Memphis 22 3.23 6.7 9.7 9.9 11.0 Miami 25 6.55 3.5 7.1 6.8 5.8 Nashville 30 4.65 7.4 9.4 9.4 8.6 Orlando 41 6.21 6.4 9.8 10.6 10.1 Palm Beach 56 9.25 3.2 7.2 7.4 5.9 San Antonio 57 5.36 9.7 12.6 12.5 14.6 Savannah 53 4.11 2.9 6.9 8.0 4.5 Tampa 37 5.75 5.0 8.7 9.0 10.2 South 6.1 8.7 8.9 9.2 Albuquerque 58 6.95 5.7 7.0 7.0 7.7 Central Valley, CA 44 4.44 2.7 6.8 4.5 3.8 Denver 23 7.67 5.8 8.2 8.1 8.2 Inland Empire 7 6.36 3.7 6.6 6.3 7.6 Las Vegas 39 7.08 3.5 5.5 6.2 5.5 Los Angeles 2 9.48 1.2 4.5 4.2 3.9 Oakland 35 10.19 1.0 3.6 4.9 3.9 Orange County 18 10.56 1.7 4.6 3.8 3.3 Phoenix 11 7.68 6.8 8.6 9.4 10.3 Portland 27 5.90 3.3 4.8 4.6 4.6 Reno 46 4.32 2.7 7.0 8.6 8.4 Sacramento 32 6.12 6.0 8.8 8.1 10.3 Salt Lake City 38 5.82 3.1 4.7 5.4 5.8 San Diego 28 12.62 3.9 7.0 7.5 7.4 San Francisco Peninsula 51 31.52 1.3 3.5 3.2 3.2 San Jose 21 20.92 5.9 7.8 8.1 7.8 Seattle 17 10.26 4.1 5.2 5.3 5.3 Tucson 59 6.00 8.2 9.3 9.9 11.8 Walnut Creek/I-680 Corridor 60 10.92 1.1 5.6 6.3 3.8 West 3.4 6.0 6.0 6.1 United States 4.5 7.4 7.4 7.4 **NNN asking rates are displayed on a per sq. ft. and per annum basis. Source: U.S. national figures provided by CBRE Econometric Advisors, all other figures compiled by CBRE Research, Q4 2017. 11 U.S. INDUSTRIAL & LOGISTICS Q4 2017 FIGURES
FOR MORE INFORMATION, PLEASE CONTACT: Adam Mullen Senior Managing Director Industrial & Logistics Services, Americas +1 404 923 1414 adam.mullen@cbre.com David Egan Global Head of Industrial & Logistics Research +1 312 935 1892 david.egan2@cbre.com Follow David on Twitter: @Egan2David Spencer G. Levy Americas Head of Research & Senior Economic Advisor +1 617 912 5236 spencer.levy@cbre.com Follow Spencer on Twitter: @SpencerGLevy Nikhil Mohan Economist +1 617 912 5209 nikhil.mohan@cbre.com Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
Q3 2017 U.S. INDUSTRIAL & LOGISTICS FIGURES
Q3 2017 U.S. INDUSTRIAL & LOGISTICS FIGURES EXECUTIVE SUMMARY SUPPLY AND DEMAND IMBALANCE PUSHES RENTS TO HISTORIC HIGHS Availability Rate 7.7% Vacancy Rate 4.6% Net Asking Rent $6.88 PSF Net Absorption 61.1 MSF Completions 50.8 MSF Arrows indicate change from previous quarter. With demand exceeding supply for the 28th time in the past 30 quarters, the industrial market s availability rate fell to 7.7% the lowest level since Q1 2001. Net absorption totaled 61.1 million sq. ft. in Q3, marking 30 consecutive quarters of positive demand the longest such streak in more than 20 years. After an unusually slow first quarter, demand has bounced back to a level above the cycle average, largely on the strength of e-commerce and omnichannel users. New supply grew by 12.5% quarter-over-quarter to 50.8 million sq. ft., but was down by 9.3% year-over-year. Lack of land sites and entitlement issues have kept construction in check despite record-low vacancy rates, high levels of demand and rapid rent growth. Tight supply pushed net asking rents up by 1.6% for the quarter and 6.3% year-over-year to $6.88 per sq. ft. the highest mark since CBRE began tracking this metric in 1989. Slower retail sales, auto sales and industrial production in September point to more subdued GDP growth in Q3. Moody s estimates that the impact of hurricanes Irma and Harvey will shave half a point from Q3 GDP growth due to supply chain disruptions and higher input costs of raw materials. Meanwhile, manufacturing activity and employment grew at a faster clip in September than in August. While overall employment fell by 33,000 jobs in September, largely due to the string of hurricanes, wages grew by 2.9% from a year ago and effectively offset the slowing pace of hiring. Higher wage growth and, in effect, higher disposable income couldn t have come at a better time, given that consumer confidence in October soared to its highest level since 2004. 2 U.S. INDUSTRIAL & LOGISTICS Q3 2017 FIGURES
FIGURE 1 TIGHT LABOR MARKET GENERATES CONSUMER CONFIDENCE 100 95 90 85 80 75 70 65 60 55 50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 10 9 8 7 6 5 4 3 Consumer Sentiment Index (L) Unemployment Rate % (R) Source: Federal Reserve Bank of St. Louis, September 2017. 3 U.S. INDUSTRIAL & LOGISTICS Q3 2017 FIGURES
FIGURE 2 POSITIVE NET ABSORPTION STREAK EXTENDS RECORD Net Absorption (MSF) 90 80 70 60 50 40 30 20 10 Net Absorption Avg. Over Streak 0 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Source: CBRE Econometric Advisors, Q3 2017. 4 U.S. INDUSTRIAL & LOGISTICS Q3 2017 FIGURES
FIGURE 3 U.S. INDUSTRIAL SUPPLY AND DEMAND Completions and Net Absorption (MSF) Completions (L) Net Absorption (L) Availability Rate (R) Availability Rate (%) 100 14 90 80 12 70 10 60 50 40 8 6 30 4 20 10 2 0 0 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Source: CBRE Econometric Advisors, Q3 2017. 5 U.S. INDUSTRIAL & LOGISTICS Q3 2017 FIGURES
FIGURE 4 LOWEST AND HIGHEST AVAILABILITY RATES (%) Lowest Availability Rates San Francisco Peninsula 3.2 Orange County 3.8 Los Angeles 4.2 Detroit 4.3 Central Valley, CA 4.5 Highest Availability Rates San Antonio 12.5 Baltimore 12.0 Jacksonville 10.8 Greenville & Suburban Maryland 10.7 Orlando 10.6 Source: CBRE Research, Q3 2017. 6 U.S. INDUSTRIAL & LOGISTICS Q3 2017 FIGURES
FIGURE 5 LARGEST QUARTERLY CHANGES IN AVAILABILITY RATES (BPS) Largest Decreases in Availability Ft. Lauderdale -230 Tucson -170 Jacksonville -130 Milwaukee -80 Albuquerque -70 Largest Increases in Availability Walnut Creek/I-680 Corridor 240 Savannah 180 Reno 80 Charleston & San Jose 50 Central Valley, Los Angeles, Miami, Orange County & Palm Beach 40 Source: CBRE Research, Q3 2017. 7 U.S. INDUSTRIAL & LOGISTICS Q3 2017 FIGURES
FIGURE 6 U.S. INDUSTRIAL RENT GROWTH Year-over-Year (%) 8 6 4 2 0-2 -4-6 -8-10 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Source: CBRE Econometric Advisors, Q3 2017. 8 U.S. INDUSTRIAL & LOGISTICS Q3 2017 FIGURES
FIGURE 7 U.S. INDUSTRIAL AVAILABILITY RATES (%) NNN Asking Rate ($)** Vacancy Rate (%) Availability Rate (%) Market Size Rank Q3 2017 Q3 2017 Q3 2017 Q2 2017 Q3 2016 Baltimore 33 6.18 7.0 12.0 11.8 13.4 Boston 34 7.76 7.5 10.0 10.4 12.4 Charleston 54 5.17 5.8 10.0 9.5 10.1 Charlotte 26 6.45 4.5 4.8 5.1 5.4 Greenville 31 3.29 6.7 10.7 10.7 11.3 Hartford 49 5.00 8.6 8.7 8.8 10.2 Louisville 40 3.57 7.8 8.5 8.8 7.8 Suburban Maryland* 47 8.89 7.8 10.7 11.2 11.8 Central New Jersey 8 5.80 3.4 6.1 6.6 6.7 Northern New Jersey 9 7.33 4.5 7.5 7.5 7.2 Norfolk 48 4.90 4.9 7.0 7.2 8.5 Pennsylvania/I-78/81 Corridor 12 4.42 5.3 7.2 7.3 6.4 Philadelphia 29 4.35 5.4 7.3 7.4 10.1 Pittsburgh 36 5.47 7.8 9.8 10.3 10.2 Richmond 42 4.62 4.2 6.8 7.4 8.4 Northern Virginia* 50 10.92 6.6 10.1 10.2 12.2 East 5.6 8.0 8.2 8.8 Chicago 1 4.92 4.6 6.6 6.3 5.9 Cincinnati 13 4.06 4.3 4.8 4.5 5.1 Cleveland 14 4.70 4.6 5.5 5.9 6.8 Columbus 20 3.42 4.2 6.2 6.5 7.7 Detroit 6 6.04 2.3 4.3 4.4 5.1 Indianapolis 16 4.13 4.9 6.4 6.5 6.9 Kansas City 15 4.56 5.5 7.7 8.2 7.9 Milwaukee 19 4.05 3.7 5.0 5.8 7.4 Minneapolis/St. Paul 10 6.07 4.5 6.3 6.7 7.4 St. Louis 24 4.62 5.0 6.5 6.4 7.1 Midwest 4.3 6.0 6.1 6.4 United States 4.6 7.7 7.8 7.9 * Suburban Maryland and Northern Virginia represent Washington, D.C. area. **NNN asking rates are displayed on a per sq. ft. and per annum basis. Source: U.S. national figures provided by CBRE Econometric Advisors, all other figures compiled by CBRE Research, Q3 2017. 9 U.S. INDUSTRIAL & LOGISTICS Q3 2017 FIGURES
FIGURE 7 U.S. INDUSTRIAL AVAILABILITY RATES (%) (CONTINUED) NNN Asking Rate ($)** Vacancy Rate (%) Availability Rate (%) Market Size Rank Q3 2017 Q3 2017 Q3 2017 Q2 2017 Q3 2016 Atlanta 4 4.50 7.8 9.1 9.2 10.3 Austin 55 10.39 9.3 10.2 9.9 8.7 Dallas/Ft. Worth 3 4.51 6.2 8.5 9.0 8.9 El Paso 52 4.08 7.5 9.8 9.5 10.0 Ft. Lauderdale 45 8.54 3.6 6.2 8.5 8.1 Houston 5 4.80 5.4 8.6 8.8 8.7 Jacksonville 43 4.47 5.0 10.8 12.1 12.3 Memphis 22 3.19 7.0 9.9 10.1 12.1 Miami 25 6.44 3.6 6.8 6.4 6.5 Nashville 30 4.66 7.3 9.4 9.3 8.9 Orlando 41 6.14 6.7 10.6 10.4 11.3 Palm Beach 56 9.24 3.3 7.4 7.0 5.9 San Antonio 57 5.57 9.7 12.5 12.9 13.0 Savannah 53 4.95 6.4 8.0 6.2 3.7 Tampa 37 5.75 5.0 9.0 9.5 10.8 South 6.3 8.9 9.1 9.4 Albuquerque 58 7.17 6.4 7.0 7.7 7.4 Central Valley, CA 44 4.56 1.8 4.5 4.1 4.4 Denver 23 7.61 5.4 8.1 8.3 8.2 Inland Empire 7 6.36 3.0 6.3 6.3 7.8 Las Vegas 39 6.84 4.1 6.2 6.7 6.0 Los Angeles 2 9.48 1.3 4.2 3.8 3.4 Oakland 35 9.60 1.1 4.9 4.6 3.8 Orange County 18 10.44 1.4 3.8 3.4 3.1 Phoenix 11 7.80 7.3 9.4 9.5 10.7 Portland 27 5.76 3.1 4.6 4.3 4.8 Reno 46 4.92 4.0 8.6 7.8 8.5 Sacramento 32 6.00 6.1 8.1 8.7 10.4 Salt Lake City 38 5.71 3.4 5.4 5.6 6.8 San Diego 28 12.12 4.3 7.5 7.7 7.3 San Francisco Peninsula 51 30.56 1.5 3.2 3.5 2.8 San Jose 21 21.72 5.4 8.1 7.6 7.9 Seattle 17 9.71 4.2 5.3 5.1 4.9 Tucson 59 5.99 8.2 9.9 11.6 11.7 Walnut Creek/I-680 Corridor 60 8.64 1.3 6.3 3.9 3.9 West 3.4 6.0 5.8 6.0 United States 4.6 7.7 7.8 7.9 **NNN asking rates are displayed on a per sq. ft. and per annum basis. Source: U.S. national figures provided by CBRE Econometric Advisors, all other figures compiled by CBRE Research, Q3 2017. 10 U.S. INDUSTRIAL & LOGISTICS Q3 2017 FIGURES
FOR MORE INFORMATION, PLEASE CONTACT: Adam Mullen Senior Managing Director Industrial & Logistics Services, Americas +1 404 923 1414 adam.mullen@cbre.com David Egan Global Head of Industrial & Logistics Research +1 312 935 1892 david.egan2@cbre.com Follow David on Twitter: @Egan2David Spencer G. Levy Americas Head of Research & Senior Economic Advisor +1 617 912 5236 spencer.levy@cbre.com Follow Spencer on Twitter: @SpencerGLevy Nikhil Mohan Economist +1 617 912 5209 nikhil.mohan@cbre.com Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
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