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U.S. Research ReportINDUSTRIAL MARKET OUTLOOKQ1 2017
Industrial Market Strong Despite a Break From Record Activity James Breeze, National Director of Industrial Research | USA
Featured Highlights > U.S. e-commerce sales grew 15% in Q1 2017 over Q1 2016 and now represent 8.5% of total retail sales. E-commerce will continue to be a driving force for industrial real estate in 2017.
> At the end of Q1 2017, only 5.4% of the nation’s industrial space was vacant — the lowest rate on record despite 55 million square feet of new supply completing in Q1. Product under construction declined from its record levels at year-end 2016 to 198 million square feet in the first quarter.
> Manufacturing space — and warehouse space that can handle a manufacturing component — remains a product type to watch in the coming year. In April 2017, the ISM Manufacturing Index remained near a multi-year high, backed by strong new orders. With reshoring on the rise in part due to anticipated government policies, industrial real estate with a manufacturing component will likely see increased demand for the foreseeable future.
> Tightening markets and new, higher-quality Class A space drove up industrial asking rents to $6.10 per square foot per year in Q1 2017, an all-time record for the country (not adjusted for inflation). With new development slated to decrease slightly in 2017, vacancies will likely continue their downward trend and put further pressure on asking rents.
> Nearly $14 billion in industrial assets changed hands in Q1 2017, 3% higher than this time last year. Industrial real estate was the only commercial product type to post year-over-year gains. The increase in sales volume was a direct result of more demand in secondary and tertiary markets, which both rose more than 20% in Q1 compared with the same time a year ago. With limited product available to purchase in core markets and fundamentals improving at a rapid pace in non-core areas, we expect sales to continue to rise in secondary and tertiary markets in the coming quarters.
Summary Statistics | Q1 2017 U.S. Industrial Market
Vacancy Rate 5.4%
Change From Q4 2016 -0.1%
Markets With Lower Vacancies Compared With Q1 2016
88.6%
Q1 2017 Absorption (MSF) 60.4
Markets With Positive Absorption
85.7%
Q1 2017 New Supply (MSF) 55
New Supply to Inventory 0.4%
Under Construction (MSF) 198.2
ASKING RENTS PER SQUARE FOOT PER YEAR
Average Warehouse/Distribution Center
$5.22
Average Manufacturing Space $5.34
Average Flex Space $11.32
Market IndicatorsRelative to Prior Period
Q1 2017
Q2 2017*
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE**
* Projected** Warehouse rents
U.S. Economic Indicators GDP
Q1 2017 1.2%
Q4 2016 2.1%
ISM
Apr. 2017 PMI® +4% from Apr. 2016
RAIL TIME INDICATORS
May 2017 Total Railcar Traffic +6.5% from May 2016
May 2017 Intermodal Traffic +4% from May 2016
2 U.S. Research Report | Q1 2017 | Industrial Market Outlook | Colliers International
U.S. Industrial Market Q1 2016 to Q1 2017
Source: Colliers International
5.0%
5.2%
5.4%
5.6%
5.8%
6.0%
6.2%
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
90,000,000
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
New Supply Absorption Vacancy Rate (%)
Sources: BEA, ISM, AAR
U.S. Industrial Indicators | April 2017
INDEXSERIES INDEX
(APR. 2017)
SERIES INDEX (MAR. 2016)
PERCENTAGE POINT
CHANGEDIRECTION RATE OF
CHANGETREND*
(MONTHS)
PMI® 54.8 57.2 -2.4 Growing Slower 8
New Orders 57.5 64.5 -7.0 Growing Slower 8
Production 58.6 57.6 1.0 Growing Faster 8
Employment 52 58.9 -6.9 Growing Slower 7
Supplier Deliveries 55.1 55.9 -0.8 Slowing Slower 12
Inventories 51 49.0 2.0 Growing Slower 1
Customers' Inventories 45.5 47.0 -1.5 Too Low Faster 7
Prices 68.5 70.5 -2.0 Increasing Slower 14
Backlog of Orders 57 57.5 -0.5 Growing Slower 3
Exports 59.5 59.0 0.5 Growing Faster 14
Imports 55.5 53.5 2.0 Growing Faster 3
Overall Economy Growing Slower 95
Manufacturing Sector Growing Slower 8
*Number of months moving in current directionSource: ISM
Q1 2017 brought strong overall net absorption for U.S. industrial markets — dropping the vacancy rate to an all-time-low record of 5.4%. While absorption could not keep pace with the prior three quarters, it was still significantly higher than the post-recession average. Continued demand kept new development solid and pushed asking rental rates to an all-time high.
Consumers remain the key demand driver for industrial real estate. Spending levels were solid through the first four months of 2017 and helped usher in the beginning of the eighth consecutive year of retail sales growth. And e-commerce sales continue to grow, pushing industrial occupiers to modernize supply chains to better service consumers and lower overall costs.
Furthermore, all major ports posted year-over-year gains in inbound container volume — the most important seaport driver for warehouse demand. These factors are expected to continue to support robust fundamentals in core industrial markets and expand demand in secondary markets near inland ports and large population centers.
The trend of reshoring will likely continue. Coupled with a leveling of the U.S. dollar value, this shift is expected to strengthen U.S. manufacturing and increase demand for this product type in the coming quarters. To lower transportation costs, occupiers will likely push closer to population centers. This will raise demand for urban warehousing and increase the likelihood of industrial product redevelopment and even the construction of multi-story warehousing within urban cores.
Looking forward, it appears trade policy fears have waned and will not affect supply chains in the near term. This, along with solid economic conditions and the continued need to modernize supply chains, should keep industrial fundamentals robust in the coming quarters.
Moderate Economic Expansion ContinuesModerate economic expansion continued through the first four months of 2017. The U.S. is now entering its 95th month of economic expansion, the third-longest in U.S. history. The U.S. economy slowed in Q1 2017 with annualized GDP growth of 1.2%. However, the first-quarter GDP numbers are typically the weakest of the year and the consensus view is for economic growth of around 2% for 2017 as a whole.
Along with post-election uncertainties, the low GDP growth in Q1 2017 might have restrained demand. However, other economic indicators — such as rising income growth, increased spending and greater global growth — point to upside going forward. Job growth remains solid with the U.S. economy adding an average of 178,000 jobs per month in the first quarter and increasing to 211,000 jobs in April. Continued job growth lowered the unemployment rate in April to 4.4% — the lowest in a decade — and the ratio of employment to total population is 60.2%, which is the highest since February 2009.
3 U.S. Research Report | Q1 2017 | Industrial Market Outlook | Colliers International
Vacancy Tightens Despite a Drop in Record DemandU.S. e-commerce sales rose an impressive 15% in Q1 2017 compared with the same time last year. The continued surge in e-commerce sales and the need to get products to consumers quickly while minimizing supply chain costs are forcing retailers and wholesalers into modern facilities and expanding their warehouse presences in secondary markets near inland ports, seaports and large population centers.
The need for these types of facilities is rapidly improving fundamentals in many non-core locations. One of these markets is Cincinnati, whose central location, intermodal logistics capabilities and the recent opening of the Amazon Prime Air hub has made it one of the fastest-growing e-commerce markets in the country. More than 3.1 million square feet of industrial space were absorbed in Cincinnati in Q1 2017 — the market’s highest amount of occupancy gains on record.
Robust demand for goods lowered the overall industrial vacancy rate in the U.S. to 5.4%, the lowest vacancy rate on record. In Q1 2017, vacancies dropped in 89% of the markets we track compared with the same time a year ago. Net absorption was robust at just under 61 million square feet — finishing Q1 nearly 9 million square feet higher than the average quarterly absorption since 2010. However, absorption could not keep pace with the record levels posted in mid-2016.
Development remains strong in core industrial markets, with Dallas-Fort Worth leading the way at nearly 7 million square feet of new construction in the first quarter. However, at 55 million square feet, overall development nationwide dropped to the lowest level since Q4 2015.
Tightening markets continue to put upward pressure on industrial asking rental rates, which finished Q1 2017 at $6.10 per square foot per year — significantly higher than the $5.87 per square foot per year posted the previous quarter. This also represents the highest asking rate on record (not adjusted for inflation).
Secondary and Tertiary Markets Lead the Industrial Sales ReboundIndustrial sales volume was robust in Q1 2017, increasing by 3% compared with the same time a year ago. Industrial was the only product type to post year-over-year sales volume gains, according to Real Capital Analytics.
Deal activity had been on a downward trend in recent quarters, mainly due to the record volume in 2015 that was not sustainable. The growth in Q1 2017 was due to an increase in single-building sales, up 15% compared with the same time last year. Meanwhile, portfolio sales decreased by 16% compared with Q1 2016.
Due to the large number of portfolio transactions in 2014 and 2015, a majority of inventory in core industrial markets is now institutionally owned. Many of these institutional investors are hesitant to sell a product type that is posting record rental growth and all-time-low vacancies. With a lack of options in core markets, investors are increasingly considering options in secondary and tertiary markets. This demand has created a 20% increase in sales for secondary markets and a 25% increase in tertiary markets in Q1 2017 compared with this time last year.
Capitalization (cap) rates have stabilized for industrial product but remain at historic lows. The cap rate for the sector overall stood at 6.8% in Q1 2017, essentially unchanged for six consecutive quarters. Cap rates for warehouse space are on par with the overall average, finishing Q1 2017 at 6.7% while the cap rate for flex assets averaged 6.9%. Both rates remain on par with 2016 rates and at or near all-time lows.
Top 5 MSAs* in Q1 2017: Net Absorption
Atlanta 6.4 MSF
Dallas-Fort Worth 5.9 MSF
Philadelphia/Lehigh Valley 4 MSF
Chicago 3.6 MSF
Inland Empire 3.5 MSF
*Metropolitan Statistical AreaSource: Colliers International
Top 5 MSAs* in Q1 2017: Transaction Volume
Dallas-Fort Worth $710 million
San Jose $700 million
Los Angeles $658 million
Houston $569 million
Northern New Jersey $550 million
*Metropolitan Statistical AreaSource: Colliers International
4 U.S. Research Report | Q1 2017 | Industrial Market Outlook | Colliers International
What’s Ahead for Industrial Real Estate?The industrial sector will continue to benefit from strong economic fundamentals and supply chain modernization, including a growing shift to regional distribution. Recent indications that the U.S. will work to improve trade with China and seek to negotiate terms to stay in NAFTA should be positive for trade, which should increase export volumes at U.S. ports and heighten demand for warehousing near these locations.
The shift to regional distribution — the deployment of more warehouses in more locations to get products to consumers quickly — has been a boon to both seaport and inland port markets. This is evidenced by the significant growth in loaded inbound container volumes in many ports along the East Coast, including the ports of Virginia, Savannah and Charleston. This trend should continue for the foreseeable future as occupiers are now willing to allow longer times for products to reach the U.S. via the sea in order to keep warehouses stocked and cut transportation times to customers.
All in all, 2017 is off to a solid start for U.S. industrial real estate and fundamentals are expected to remain strong with lower vacancies, higher rents and robust activity for the remainder of the year.
Top 30 Markets: Absorption YTD
Q1 2017 Absorption (SF)0M 6M
0.43M 2M
4M ≥6M
Fair�eld, CA0.79M
Los Angeles, CA1.19M
Inland Empire, CA3.5M
Phoenix, AZ2.06M
Las Vegas, NV1.18M
Kansas City, MO-KS1.97M
Dallas-Ft. Worth, TX5.93M
Houston, TX1.36M
Tampa Bay, FL1M
Atlanta, GA6.38M
St. Louis, MO0.92M Cincinnati, OH
3.15M
Indianapolis, IN1.44M
New Jersey-Northern2.23M
New Jersey-Central2.52M
Philadelphia, PA3.26M
Baltimore, MD0.82M
Washington, D.C.0.77M
Charlotte, NC3.27M
San Diego, CA0.55M
Sacramento, CA1.24M
Chicago, IL3.66M
Grand Rapids, MI1.59M
Savannah, GA0.67M
Charleston, SC0.43M
Shenandoah Valley/I-81 Corridor
0.80M
Hartford, CT0.84M
Boston, MA0.99M
Dayton, OH0.83M Lehigh Valley
0.80M
Top 30 Markets: Absorption in Q1 2017
Supplemental Data: Largest 20 MarketsVacancy vs. Absorption By Port Location and Region
Source: Colliers Q1 2017 Industrial Survey Source: Colliers Q1 2017 Industrial survey
Q1 2017 Warehouse Rent History & OutlookRent Outlook Over Next 12 Months
Vacancy vs. YOY Change in VacancyBy Port Location and Region
Source: Colliers Q1 2017 Industrial Survey
Absorption vs. New Supply by Port Location Absorption Outlook Over Next 12 Months
Source: Colliers Q1 2017 Industrial Survey
5 U.S. Research Report | Q1 2017 | Industrial Market Outlook | Colliers International
Vacancy vs. YTD AbsorptionBy Port Location and Region
-1M 0M 1M 2M 3M 4M 5M 6M0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Q1 2
017
Vaca
ncy
Rate
Q1 2017 Absorption (SF)
Port LocationEastern U.S.Great LakesGulf CoastInlandWest CoastNo port
RegionMidwestNortheastSouthWest
Median
Median
Phoenix, AZ2.1M
Atlanta, GA6.4M
Kansas City, MO-KS2.0M
Indianapolis, IN1.4M
Chicago, IL3.7M
Dallas-Ft. Worth, TX5.9M
Philadelphia, PA3.3M
Houston, TX1.4M
Inland Empire, CA3.5M
Detroit, MI-0.5M
Los Angeles, CA1.2M
Silicon Valley, CA0.3M
New Jersey-Central2.5M
Milwaukee, WI0.1M
Cleveland, OH0.1M
Cincinnati, OH3.2M
Minneapolis-St. Paul, MN0.5M New Jersey-Northern
2.2M
Columbus, OH-0.5M
Memphis, TN-0.8M
Vacancy vs. YTD AbsorptionBy Port Location and Region
YOY Change in Vacancy (since Q1 2016)-2.0% -1.8% -1.6% -1.4% -1.2% -1.0% -0.8% -0.6% -0.4% -0.2% 0.0% 0.2% 0.4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Q1 2
017
Vaca
ncy
Rate
Median
Median
Port LocationEastern U.S.Great LakesGulf CoastInlandWest CoastNo port
Vacancy Outlook(Over Next 12 Months)
UpSameDown
Los Angeles, CA
Phoenix, AZ
Atlanta, GA
Kansas City, MO-KSHouston, TX
Dallas-Ft. Worth, TXChicago, IL
Indianapolis, IN
Philadelphia, PA
Memphis, TN
Milwaukee, WI
Minneapolis-St. Paul, MN
New Jersey-Northern
New Jersey-Central
Port LocationEastern U.S.Great LakesGulf CoastInlandWest CoastNo port
Absorption Outlook(Over Next 12 Months)
PositiveClose to zeroNegative
Q1 2017 New Supply (SF)
Q1 2
017
Abso
rptio
n (S
F)
0M 1M 2M 3M 4M 5M 6M 7M
-1M
0M
1M
2M
3M
4M
5M
6M
Median
Median
Chicago, IL
Dallas-Ft. Worth, TX
Philadelphia, PA
Columbus, OH
Atlanta, GA
Houston, TXIndianapolis, IN
Kansas City, MO-KS
Detroit, MI
Silicon Valley, CAMilwaukee, WI
Phoenix, AZ
New Jersey-Central
Cincinnati, OH
Minneapolis-St. Paul, MN
Los Angeles, CA
Cleveland, OH
New Jersey-Northern
Memphis, TN
-6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14%$0
$1
$2
$3
$4
$5
$6
$7
$8
Q1 2
017
Aver
age
War
ehou
se/D
istr
ibut
ion
Rent
(S/S
F/Ye
ar)
YOY Change in Warehouse/Distribution Rent (since Q1 2016)
Median
Median
Port LocationEastern U.S.Great LakesGulf CoastInlandWest CoastNo port
Rent OutlookUpSame
Indianapolis, IN
Los Angeles, CA
New Jersey-Northern
New Jersey-Central
Houston, TX
Phoenix, AZ
Philadelphia, PAKansas City, MO-KS
Chicago, IL
Milwaukee, WI
Memphis, TN
Atlanta, GA
Dallas-Ft. Worth, TX
6 U.S. Research Report | Q1 2017 | Industrial Market Outlook | Colliers International
United States | Industrial Survey | Inventory, New Supply, Under Construction
MARKET INVENTORY MAR. 31, 2017 (SF)
TOTAL NEW SUPPLY Q1 2017 (SF) TOTAL UNDER CONSTRUCTION (SF)
NORTHEAST
Baltimore, MD 222,320,385 300,350 5,559,314
Boston, MA 148,358,447 151,200 345,000
Hartford, CT 108,242,566 507,000 0
New Hampshire 61,908,706 0 240,000
New York City Metro 810,144,811 1,599,250 12,957,915
> Central New Jersey 314,463,836 838,250 8,404,023
> Long Island 136,859,136 0 85,052
> Northern New Jersey 358,821,839 761,000 4,468,840
Philadelphia-Lehigh Valley, PA 438,983,048 253,118 5,608,241
Pittsburgh, PA 158,640,523 0 175,650
Washington, D.C. 193,450,989 302,741 2,124,425
Northeast Total 2,142,049,475 3,113,659 27,010,545
SOUTH
Atlanta, GA 663,473,168 4,675,697 16,847,665
Augusta Aiken, GA 9,602,480 200,000 40,000
Austin, TX 71,372,256 391,482 728,440
Birmingham, AL 114,644,533 0 0
Charleston, SC 47,182,345 290,002 3,076,417
Charlotte, NC 153,713,945 2,774,607 2,597,948
Columbia, SC 66,685,486 674,144 224,000
Dallas-Fort Worth, TX 799,267,504 6,761,848 18,820,789
Florence-Myrtle Beach, SC 35,571,713 441,075 0
Greenville-Spartanburg-Anderson, SC 190,697,646 269,787 727,450
Houston, TX 538,997,602 3,335,460 4,153,566
Huntsville, AL 46,947,661 0 0
Jacksonville, MI 126,847,445 66,900 2,991,940
Little Rock, AR 45,809,816 0 333,760
Memphis, TN 237,411,590 1,425,576 1,563,220
Nashville, TN 185,290,085 637,180 0
Norfolk, VA 93,826,438 0 605,559
Orlando, FL 138,218,378 608,744 1,564,893
Richmond, VA 93,052,328 0 757,505
Savannah, GA 59,899,442 724,200 4,617,371
Shenandoah Valley-I-81 Corridor 89,922,746 400,400 2,462,273
South Florida 356,769,463 751,152 3,205,845
> Fort Lauderdale 105,793,795 0 751,364
> Miami 200,966,127 635,607 2,120,859
> Palm Beach 50,009,541 115,545 333,622
Tampa Bay, FL 208,999,707 667,814 3,271,359
South Total 4,374,203,777 25,096,068 68,590,000
Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.
7 U.S. Research Report | Q1 2017 | Industrial Market Outlook | Colliers International7
United States | Industrial Survey | Inventory, New Supply, Under Construction
MARKET INVENTORY MAR. 31, 2017 (SF)
TOTAL NEW SUPPLY Q1 2017 (SF) TOTAL UNDER CONSTRUCTION (SF)
MIDWEST
Chicago, IL 1,357,931,858 4,151,794 18,269,594
Cincinnati, OH 254,302,495 295,464 3,438,345
Cleveland, OH 395,375,073 150,200 1,888,660
Columbus, OH 232,408,878 531,483 3,239,031
Dayton, OH 104,692,619 570,000 348,000
Detroit, MI 794,966,378 671,382 9,906,034
Grand Rapids, MI 116,318,973 1,093,800 0
Indianapolis, IN 238,970,881 1,827,928 5,437,220
Kansas City, MO 241,303,679 1,595,114 7,340,074
Milwaukee, WI 250,914,390 210,334 677,830
Minneapolis-St. Paul, MN 249,336,510 308,643 1,059,442
Omaha, NE 68,168,788 88,356 1,068,000
St. Louis, MO 232,353,343 537,753 3,380,378
Midwest Total 4,537,043,865 12,032,251 56,052,608
WEST
Albuquerque, NM 39,635,197 0 0
Bakersfield, CA 32,670,146 0 0
Boise, ID 46,283,241 0 112,500
Denver, CO 223,291,392 643,892 4,899,970
Fresno, CA 47,428,952 0 0
Greater Los Angeles, CA 1,577,138,370 4,393,500 22,847,430
> Inland Empire 488,140,400 3,451,500 17,400,400
> Los Angeles 896,509,170 900,300 5,395,530
> Orange County 192,488,800 41,700 51,500
Honolulu, HI 39,975,596 0 0
Las Vegas, NV 126,391,153 2,265,340 3,469,998
Phoenix, AZ 293,466,200 1,797,282 4,274,022
Sacramento, CA 146,701,634 423,734 0
San Diego, CA 189,195,765 567,464 905,184
San Francisco Bay Area, CA 527,834,051 2,006,154 3,884,015
> East Bay 181,153,923 0 2,494,626
> Fairfield, CA 49,736,416 861,000 779,779
> San Francisco Peninsula 39,584,245 0 58,000
> Silicon Valley 257,359,467 1,145,154 551,610
Seattle-Puget Sound, WA 271,579,029 1,775,000 3,156,800
Stockton, CA 102,916,599 898,850 2,965,445
West Total 3,664,507,325 14,771,216 46,515,364
U.S. TOTAL 14,717,804,442 55,013,194 198,168,517
(continued)
Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.
8 U.S. Research Report | Q1 2017 | Industrial Market Outlook | Colliers International
United States | Industrial Survey | Absorption, Vacancy
MARKET ABSORPTION Q1 2017 (SF)
YTD ABSORPTION
VACANCY RATE DEC. 31, 2016
VACANCY RATE MAR. 31, 2017
NORTHEAST
Baltimore, MD 820,036 820,036 8.8% 8.6%
Boston, MA 987,994 987,994 11.8% 11.2%
Hartford, CT 835,297 835,297 6.7% 6.7%
New Hampshire 577,308 577,308 6.0% 5.8%
New York City Metro 4,734,341 4,734,341 4.6% 3.9%
> Central New Jersey 2,517,536 2,517,536 4.3% 3.4%
> Long Island -8,769 -8,769 3.4% 3.4%
> Northern New Jersey 2,225,574 2,225,574 5.2% 4.5%
Philadelphia-Lehigh Valley, PA 4,057,497 4,057,497 6.6% 5.7%
Pittsburgh, PA 398,543 398,543 6.4% 6.1%
Washington, D.C. 770,170 770,170 8.4% 7.9%
Northeast Total 13,181,186 13,181,186 6.6% 6.0%
SOUTH
Atlanta, GA 6,383,332 6,383,332 8.0% 7.7%
Augusta Aiken, GA 455,100 455,100 11.9% 8.9%
Austin, TX -76,382 -76,382 4.2% 6.2%
Birmingham, AL -350 -350 7.5% 6.8%
Charleston, SC 433,773 433,773 5.1% 4.8%
Charlotte, NC 3,274,955 3,274,955 5.7% 5.3%
Columbia, SC -163,284 -163,284 10.1% 11.3%
Dallas-Fort Worth, TX 5,928,266 5,928,266 6.0% 6.2%
Florence-Myrtle Beach, SC 182,464 182,464 8.5% 9.1%
Greenville-Spartanburg-Anderson, SC 513,822 513,822 7.3% 7.2%
Houston, TX 1,364,672 1,364,672 5.3% 5.6%
Huntsville, AL 18,450 18,450 5.6% 5.6%
Jacksonville, MI -308,736 -308,736 5.0% 5.2%
Little Rock, AR 281,401 281,401 10.8% 9.6%
Memphis, TN -752,619 -752,619 6.6% 7.2%
Nashville, TN 428,293 428,293 4.0% 4.3%
Norfolk, VA 303,577 303,577 7.2% 6.6%
Orlando, FL 481,143 481,143 5.1% 6.9%
Richmond, VA 1,586 1,586 8.7% 6.7%
Savannah, GA 670,596 670,596 7.1% 3.2%
Shenandoah Valley-I-81 Corridor 799,848 799,848 6.8% 6.7%
South Florida 960,136 960,136 4.1% 4.0%
> Fort Lauderdale 428,352 428,352 4.8% 4.4%
> Miami 322,846 322,846 3.7% 3.9%
> Palm Beach 208,938 208,938 4.0% 3.8%
Tampa Bay, FL 1,002,587 1,002,587 6.3% 6.1%
South Total 22,182,630 22,182,630 6.3% 6.3%
Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.
9 U.S. Research Report | Q1 2017 | Industrial Market Outlook | Colliers International9
United States | Industrial Survey | Absorption, Vacancy
MARKET ABSORPTION Q1 2017 (SF)
YTD ABSORPTION
VACANCY RATE DEC. 31, 2016
VACANCY RATE MAR. 31, 2017
MIDWEST
Chicago, IL 3,662,174 3,662,174 6.5% 6.6%
Cincinnati, OH 3,150,584 3,150,584 4.8% 3.5%
Cleveland, OH 110,841 110,841 4.8% 4.6%
Columbus, OH -529,844 -529,844 5.4% 5.5%
Dayton, OH 827,725 827,725 6.6% 6.2%
Detroit, MI -542,593 -542,593 3.1% 3.4%
Grand Rapids, MI 1,588,459 1,588,459 5.6% 5.3%
Indianapolis, IN 1,443,495 1,443,495 5.4% 5.5%
Kansas City, MO 1,974,802 1,974,802 6.3% 6.0%
Milwaukee, WI 119,113 119,113 4.3% 4.4%
Minneapolis-St. Paul, MN 523,127 523,127 5.2% 5.3%
Omaha, NE 117,443 117,443 3.1% 3.1%
St. Louis, MO 918,969 918,969 6.9% 6.4%
Midwest Total 13,364,295 13,364,295 5.5% 5.2%
WEST
Albuquerque, NM -28,969 -28,969 5.3%
Bakersfield, CA 110,679 110,679 4.2% 4.4%
Boise, ID -81,315 -81,315 2.4% 2.5%
Denver, CO 87,190 87,190 4.6% 4.5%
Fresno, CA 56,980 56,980 5.5% 5.4%
Greater Los Angeles, CA 4,245,500 4,245,500 2.2% 2.3%
> Inland Empire 3,504,800 3,504,800 4.1% 4.1%
> Los Angeles 1,190,500 1,190,500 1.3% 1.2%
> Orange County -449,800 -449,800 1.9% 2.5%
Honolulu, HI 35,872 35,872 1.6% 1.5%
Las Vegas, NV 1,176,602 1,176,602 5.5% 6.3%
Phoenix, AZ 2,059,521 2,059,521 10.0% 9.8%
Sacramento, CA 1,238,708 1,238,708 8.8% 8.2%
San Diego, CA 548,193 548,193 4.7% 4.9%
San Francisco Bay Area, CA 1,218,603 1,218,603 2.0% 4.2%
> East Bay 185,824 185,824 1.3% 2.5%
> Fairfield, CA 790,807 790,807 6.1% 6.3%
> San Francisco Peninsula -47,602 -47,602 1.9% 2.0%
> Silicon Valley 289,574 289,574 5.4%
Seattle-Puget Sound, WA 490,005 490,005 2.7% 2.9%
Stockton, CA 478,705 478,705 6.0% 6.3%
West Total 11,636,274 11,636,274 3.7% 4.0%
U.S. TOTAL 60,364,385 60,364,385 5.5% 5.4%
(continued)
Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.
10 U.S. Research Report | Q1 2017 | Industrial Market Outlook | Colliers International
United States | Industrial Survey | Average Asking NNN Rents as of March 2017
MARKET MANUFACTURING SPACE (USD/SF/YR)
FLEX / SERVICE SPACE (USD/SF/YR)
WAREHOUSE / DISTRIBUTION SPACE
(USD/SF/YR)
NORTHEAST
Baltimore, MD $3.46 $10.81 $5.24
Boston, MA $6.15 $10.58 $5.86
Hartford, CT $4.26 $7.07 $4.61
New Hampshire $6.07 $10.26 $5.46
New York City Metro $6.77 $11.49 $7.18
> Central New Jersey $5.90 $11.84 $5.95
> Long Island $10.05 $13.48 $9.60
> Northern New Jersey $6.59 $9.67 $7.28
Philadelphia-Lehigh Valley, PA $4.11 $8.93 $4.76
Pittsburgh, PA $3.84 $9.40 $5.14
Washington, D.C. $6.16 $12.36 $7.66
Northeast Total $5.06 $10.90 $5.94
SOUTH
Atlanta, GA $3.28 $8.64 $3.96
Augusta Aiken, GA $3.38 $2.63
Austin, TX $13.71 $8.60
Birmingham, AL $6.30 $3.17
Charleston, SC $3.95 $11.74 $4.92
Charlotte, NC $2.65 $8.70 $4.54
Columbia, SC $2.69 $9.88 $3.37
Dallas-Fort Worth, TX $4.71 $9.66 $4.27
Florence-Myrtle Beach, SC $1.96 $8.50 $3.44
Greenville-Spartanburg-Anderson, SC $5.57 $8.47 $3.04
Houston, TX $11.19 $7.04
Huntsville, AL $8.93 $5.64
Jacksonville, MI $9.22 $4.08
Little Rock, AR $9.14 $3.35
Memphis, TN $4.40 $2.56
Nashville, TN $3.72 $8.56 $4.72
Norfolk, VA $5.04 $8.45 $4.88
Orlando, FL $9.55 $5.46
Richmond, VA $4.13 $7.67 $3.93
Savannah, GA $3.51 $7.00 $4.52
Shenandoah Valley-I-81 Corridor $4.12 $6.38 $3.88
South Florida $9.91 $16.30 $10.32
> Fort Lauderdale $9.03 $12.37 $8.28
> Miami $12.19 $22.81 $11.61
> Palm Beach $8.36 $11.96 $8.79
Tampa Bay, FL $8.12 $4.86
South Total $4.11 $9.54 $4.76
Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.* Straight averages used
11 U.S. Research Report | Q1 2017 | Industrial Market Outlook | Colliers International11
United States | Industrial Survey | Average Asking NNN Rents as of March 2017
MARKET MANUFACTURING SPACE (USD/SF/YR)
FLEX / SERVICE SPACE (USD/SF/YR)
WAREHOUSE / DISTRIBUTION SPACE
(USD/SF/YR)
MIDWEST
Chicago, IL $5.05
Cincinnati, OH $3.26 $6.27 $3.94
Cleveland, OH $3.02 $7.54 $4.37
Columbus, OH $6.57 $3.11
Dayton, OH $2.48 $4.70 $3.25
Detroit, MI $6.77 $4.95
Grand Rapids, MI $4.16 $4.17 $4.30
Indianapolis, IN $4.57 $6.29 $3.50
Kansas City, MO $4.29 $8.75 $4.59
Milwaukee, WI $4.79 $5.59 $4.50
Minneapolis-St. Paul, MN $4.80 $10.05 $4.77
Omaha, NE $4.79 $5.94 $4.78
St. Louis, MO $4.15 $6.86 $4.07
Midwest Total $4.12 $7.00 $4.62
WEST
Albuquerque, NM $5.96 $8.02 $5.79
Bakersfield, CA $9.57 $8.08 $4.70
Boise, ID $6.08
Denver, CO $8.53 $10.54 $7.71
Fresno, CA $3.14 $9.90 $4.12
Greater Los Angeles, CA $7.47
> Inland Empire $6.32
> Los Angeles $8.39
> Orange County $10.14
Honolulu, HI $14.60
Las Vegas, NV $8.80 $10.59 $6.44
Phoenix, AZ $6.47 $12.70 $6.27
Sacramento, CA $5.63 $8.70 $4.54
San Diego, CA $10.89 $18.48 $10.60
San Francisco Bay Area, CA $10.52 $23.21 $7.86
> East Bay $9.83 $19.44 $6.90
> Fairfield, CA $7.28 $8.12 $5.82
> San Francisco Peninsula $16.50
> Silicon Valley $13.65 $23.56 $9.95
Seattle-Puget Sound, WA $7.83 $16.37 $7.01
Stockton, CA $5.88 $5.89 $4.71
West Total $8.25 $17.61 $6.81
U.S. TOTAL $5.34 $11.32 $5.22
(continued)
Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.* Straight averages used
Copyright © 2017 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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+1 213 532 [email protected]
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National Director of Industrial Research | USA+1 909 937 6365
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CONTRIBUTORSAndrew Nelson
Chief Economist | USA
Jeff Simonson U.S. Senior Research Analyst | USA
AJ Paniagua U.S. Research Analyst | USA
