Another Banner Year Ahead for Industrial Market
January 30, 2020 | Barbra Murray | Commercial Property Executive
The industrial sector closed 2019 in a strong position, paving the way for another robust year in 2020, according to leading logistics real estate provider Prologis Inc.’s new report, U.S. Industrial Business Indicator – January 2020. The IBI, Prologis’ proprietary survey of customer sentiment, reached 61.4 in the fourth quarter of 2019 and utilization hit 87 percent, suggesting a minimal availability of shadow space in the market as customers made full use of existing properties.
Buoyed by accelerated consumption and a strong showing by e-commerce users, demand for industrial real estate increased by 240 million square feet in 2019. The figure marked a continued period of normalcy, first seen in the third quarter following the untenably high numbers recorded in 2018. Supply rose in lower barrier locations, with development activity increasing as a result of the investment community’s enthusiasm for the industrial sector. Completions rose 3 percent year-over-year to 275 million square feet.
Overall, absorption was on par with new deliveries in 2019 and the supply-demand dynamic allowed historically low vacancy rates to persist in the mid-4 percent range. “Demand for high-quality, well-located logistics properties has exceeded supply for over a decade. This continues to be the case in many U.S. markets, particularly in Last Touch locations where developable land near consumers is scarce,” Melinda McLaughlin, vice president of research with Prologis, told Commercial Property Executive.
