Vacancy rates for US industrial space fall

12 May, 2006, Frankfurt

Despite the large number of new industrial builds completed in the USA in recent months, the amount of industrial space lying vacant has fallen. According to Cushman & Wakefield (C&W), the percentage of vacant lots in 26 of the 31 largest US industrial markets fell from 9.2% in the first quarter of 2005 to 8.1% at the end of the first quarter of 2006. Palm Beach and Miami are experiencing the lowest vacancy rates for five years, which C&W attributes to Florida’s strong economic development coupled with increased levels of employment. In Bellevue, Washington, the shortage of general office space has led to lessees moving to locations designed for high-tech businesses.

A large number of new industrial builds have been constructed in the US over the past few years. In the last quarter alone, 2.6 million m² of industrial space was completed, of which around 30% was leased in advance and 70% built speculatively. C&W considers this “a good indicator that developers were confident in the high demand”.
The largest areas of industrial space to appear on the market were 706,000 m² in Chicago and 660,000 m² in Inland Empire.

In the first quarter of 2006, the total absorption of space was approximately 880,000 m², the largest examples of which were in Chicago (280,000 m²), California's Inland Empire (241,000 m²), Silicon Valley (195,000 m²), Orange County (167,000 m²) and Phoenix (149,000 m²). During the first three months of this year, over 6.7 million m² of industrial space was leased.

Investments rise by 22.1%

The investment market experienced a strong start to the year. In the first quarter of 2006, approximately 3.7 million m² of industrial space changed hands, representing a year-on-year increase of 22.1%. Most transactions took place in Chicago, where 1.1 million m² of industrial space was acquired, which represents 29.4% of the entire industrial investment volume. C&W forecasts that “the availability of low-priced capital and continued low interest rates will continue to contribute to positive developments in the investment market over the coming months”.

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