Industrial Market Statistics Point to Accelerating Recovery
The national industrial market definitely met and potentially exceeded expectations during the first quarter. Based on preliminary results, approximately 31 million square feet were absorbed, the strongest quarterly performance since the fourth quarter of 2007, while construction has remained muted – only 5 million square feet was delivered during the quarter, and 13 million square feet remains under construction across the country. Improving demand and minimal new construction deliveries drove the national vacancy rate down 20 basis points to 10.2 percent from the fourth quarter 2010, 70 basis points down from its recent peak of 10.9 year over year. Asking rental rates have bottomed, with preliminary numbers showing an increase of nearly 2.4 percent from the previous quarter, translating into 9.9 percent annualized growth.
Overall, we are very encouraged by the recovery in the broader industrial market. While delivery of new construction will delay the return to pre-recession levels, local market conditions are getting closer and closer to experiencing sustained and meaningful net effective rent growth.
Stay tuned for the full national report, which is scheduled to be released later this month. Local reports should be available over the course of the next week. Source: Grubb & Ellis