"First Quarter 2011 National Logistics-Market Does Not Disappoint"
Nationwide, nearly 18 million square feet of logistics space was absorbed in the first quarter. Although the logistics market did not see the same acceleration of demand we reported for the overall industrial sector, the logistics segment consistently outperformed the other property types throughout the downturn and recovery. New completions totaled 3 million square feet for the fifth consecutive quarter, and just 23 projects totaling 10 million square feet remained under construction across the country. Most of the projects currently under construction are build-to-suit projects, with preleasing averaging 89 percent. Construction on the largest speculative building started during the first quarter, a 616,000-square-foot distribution warehouse located in the fast-rebounding Inland Empire market. This market has seen its supply of available, large blocks of space go from 17 to seven over the course of one year. At least two more buildings will break ground in the Inland Empire market this year. Measured by net absorption, Inland Empire was the best performing market during the first quarter, with approximately 25 percent of total demand occurring in the market. Other large logistics markets also performed well, with 88 percent of total demand occurring in the nation’s top six logistics markets: Southern California, Atlanta, Chicago, Central Pennsylvania, Dallas and Northern New Jersey. Strong demand and minimal new deliveries continue to drive vacancy downward. During the quarter, vacancy dropped 40 basis points to 12.2 percent, while availability declined 50 basis points to 15.9 percent. Asking net rents grew 3.2 percent on an annualized basis. The first quarter Grubb & Ellis Industrial Broker Market Sentiment survey identified third-party logistics providers as the most active industry across the nation. This market-level intelligence coupled with economic indicators paint a continuously brighter picture for the national logistics market.