U.S. Warehouse Supply At Its Tightest in Two Decades
The warehouse availability rate, which includes properties that are vacant or will soon be vacant, has fallen for a record 32 consecutive quarters
As consumers do more of their shopping online, availability of warehouse space to store those goods and fulfill orders continues to decline across the U.S. Photo: Bloomberg News
By
Erica E. Phillips
July 11, 2018 10:30 a.m. ET
For U.S. retailers, manufacturers, importers and exporters, warehouse space is at its tightest since 2000, when the first dot-com boom was driving strong consumer spending and imports from China were beginning to surge.
Economists with real-estate brokerage CBRE Group Inc. CBRE -1.66% say in a report released Wednesday that new warehouse space is getting gobbled up as soon as it’s completed. In the second quarter, demand for industrial space went beyond the 49 million square feet that came online, but supply and demand are edging closer to equilibrium..
As consumers increasingly do their shopping on the internet—even buying big, bulky items like furniture off the internet—the availability of warehouse space to store those goods and fulfill orders continues to decline across the U.S. In the second quarter, industrial real estate availability fell to 7.2%, the lowest measure since 2000, CBRE economists said.
The industrial availability rate—which includes properties that are vacant or will soon be vacant—has now fallen for a record 32 consecutive quarters, according to CBRE, the longest stretch of declines since the firm began tracking the data in 1988.
Overall the market is “remarkably balanced,” said Tim Savage, senior managing economist for CBRE. He said industrial developers have been able to respond quickly to most of the demand in many markets because the structures are relatively simple to build: “Just four walls and a roof.”
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Some distribution centers have added fulfillment operations. Other warehouses have converted to “cross-dock” facilities to handle last-mile delivery of bulky items. And many brick-and-mortar retail locations have added e-commerce services, reducing the storefront footprint.
“You’re seeing a broad shift in the blurring of the line between retail and industrial space,” Mr. Savage said. “So something that may appear as a complete retail space does have an industrial component to it.”
Changes to trade policy could throw off the current near-alignment of supply and demand in industrial real estate, Mr. Savage said.
Goods bound for export occupy the majority of U.S. warehouse space, as imports tend to move through distribution facilities more quickly. That means much of the warehouse space could end up empty over the longer term if demand for U.S. exports declines as a result of a trade war.
https://www.wsj.com/articles/u-s-wa...s-1531319401?mod=pls_whats_news_us_business_f
The warehouse availability rate, which includes properties that are vacant or will soon be vacant, has fallen for a record 32 consecutive quarters
As consumers do more of their shopping online, availability of warehouse space to store those goods and fulfill orders continues to decline across the U.S. Photo: Bloomberg News
By
Erica E. Phillips
July 11, 2018 10:30 a.m. ET
For U.S. retailers, manufacturers, importers and exporters, warehouse space is at its tightest since 2000, when the first dot-com boom was driving strong consumer spending and imports from China were beginning to surge.
Economists with real-estate brokerage CBRE Group Inc. CBRE -1.66% say in a report released Wednesday that new warehouse space is getting gobbled up as soon as it’s completed. In the second quarter, demand for industrial space went beyond the 49 million square feet that came online, but supply and demand are edging closer to equilibrium..
As consumers increasingly do their shopping on the internet—even buying big, bulky items like furniture off the internet—the availability of warehouse space to store those goods and fulfill orders continues to decline across the U.S. In the second quarter, industrial real estate availability fell to 7.2%, the lowest measure since 2000, CBRE economists said.
The industrial availability rate—which includes properties that are vacant or will soon be vacant—has now fallen for a record 32 consecutive quarters, according to CBRE, the longest stretch of declines since the firm began tracking the data in 1988.
Overall the market is “remarkably balanced,” said Tim Savage, senior managing economist for CBRE. He said industrial developers have been able to respond quickly to most of the demand in many markets because the structures are relatively simple to build: “Just four walls and a roof.”
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Some distribution centers have added fulfillment operations. Other warehouses have converted to “cross-dock” facilities to handle last-mile delivery of bulky items. And many brick-and-mortar retail locations have added e-commerce services, reducing the storefront footprint.
“You’re seeing a broad shift in the blurring of the line between retail and industrial space,” Mr. Savage said. “So something that may appear as a complete retail space does have an industrial component to it.”
Changes to trade policy could throw off the current near-alignment of supply and demand in industrial real estate, Mr. Savage said.
Goods bound for export occupy the majority of U.S. warehouse space, as imports tend to move through distribution facilities more quickly. That means much of the warehouse space could end up empty over the longer term if demand for U.S. exports declines as a result of a trade war.
https://www.wsj.com/articles/u-s-wa...s-1531319401?mod=pls_whats_news_us_business_f
