Press Releases

After 26% Growth During 2010s, Rents Still Rising in Majority of Markets

February 05, 2020


Houston – Between the first quarter of 2010 and the fourth quarter of 2019, the U.S. industrial market experienced occupancy gains of more than 3 billion square feet, according to Transwestern’s latest national report on the sector. In the most recent quarter, 58.6 million square feet of absorption contributed to that total.

Meanwhile, the U.S. average asking rental rate climbed to $6.38 per square foot in the fourth quarter, peaking for the third straight year. Five markets, including Las Vegas, Philadelphia, Oklahoma City, Boston and Raleigh-Durham, all posted year-over-year rent growth over 10%.

“Positive net absorption for 40 straight quarters is a remarkable trend,” said Matthew Dolly, Research Director. “U.S. job growth and strong consumer spending continue to drive retail sales, and despite record new deliveries, the construction pipeline remains full. We anticipate rental rates – which, on average, grew by more than 26% during the past decade – will continue to rise throughout the year.”

Despite many positive influences on industrial real estate, a shortage of labor has generated some headwinds for the logistics sector. National e-commerce sales logged the highest annual growth in its 20-year existence during 2019, which included a record monthly increase of 6.5% for December. At this pace, more workers will be required in order to keep supply chains moving efficiently.

Construction is also an area to watch. New product deliveries in fourth quarter 2019 were at the highest level in six quarters, contributing to a modest rise in average national vacancy. Developers continue to surge ahead with projects that present more infill space constraints and contamination issues than in the past. Approximately 450 million square feet of new space is underway nationally, with the largest percentage of that total concentrated in Dallas-Fort Worth, California’s Inland Empire, Houston, Chicago, Atlanta and New Jersey. Currently, only the Inland Empire and New Jersey register vacancy below the national average of 5%.

Looking ahead, rising construction prices, concerns around overbuilding, and the approaching presidential election could begin to curb development in some markets, even as rental rates rise.

“While trade war anxieties have subsided, uncertainty during election years sometimes causes deceleration in leasing velocity – although the industrial market ignored that tendency during 2016,” Dolly said. “It’s the nature of the industry for occupiers to exhibit more caution when it comes to making major business decisions.”

Download the full fourth quarter 2019 U.S. industrial market report at: https://twurls.com/us-ind-4q19

ABOUT TRANSWESTERN COMMERCIAL SERVICES

Transwestern Commercial Services (TCS) is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service and innovative client solutions. Applying a consultative approach to Agency Leasing, Asset Services, Occupier Solutions, Capital Markets and Research, our fully integrated global organization adds value for investors, owners and occupiers of all commercial property types. We leverage market insight and operational expertise from across the Transwestern enterprise, which includes firms specializing in development and real estate investment management. TCS has 34 U.S. offices and assists clients from more than 200 offices in 37 countries through strategic alliances with France-based BNP Paribas Real Estate and Canada-based Devencore. Experience Extraordinary at transwestern.com and @Transwestern.

ABOUT TRANSWESTERN

The Transwestern enterprise comprises diversified real estate services, investment management and development companies. The privately held, fully integrated organization leverages competencies in office, industrial, retail, multifamily and healthcare to add value for investors, owners and occupiers of real estate.

Media Contact:

Stefanie Lewis

713.272.1266

stefanie.lewis@transwestern.com

twmediarelations@transwestern.com

Matt Dolly

Director of Research - NJ

Florham Park, New Jersey

(973) 947-9244