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Warehouse Rents are up as Demand for Space Outpaces Supply, According to Reports

warehouse real estate

The warehouse and distribution industry is red hot according to new Q3 reports from JLL and the CRBE Group.

In its Q3 report, JLL, a professional services company based in Chicago that specializes in real estate, says that the space in the U.S. market is very tight. Today the market spans 165.6 million square feet while developers have delivered just an additional 161 million square feet.

Four of the five markets with the lowest availability are in California: San Francisco (3.2 percent), Orange County (3.8 percent), Los Angeles (4.2 percent) and the Central Valley (4.5 percent). Detroit is the only area outside California to make the list, having just 4.3 percent of its supply available.

Availability is greatest in San Antonio (12.5 percent), Baltimore (12 percent), Jacksonville (10.8 percent), suburban Maryland (10.7 percent), and Orlando (10.6 percent).

The CBRE Group, a commercial real estate services firm based in Los Angeles, reports that the tight supply is pushing rents up by 1.6 percent for the quarter, and 6.3 percent year-to-year to $6.9 per square foot. That represents a historic benchmark since 1989, the year CBRE started tracking rents.

In its Q3 report, CBRE says that demand for space has exceeded supply 28 times in the past 30 quarters and the market’s availability rate has fallen to about 8 percent, the lowest level since Q1 2001. The firm says that new supply grew 12.5 percent per quarter to a total of 50.8 million square feet. But even that was down 9.3 percent, year-over-year.

Does your experience reflect these findings? How has shortened supply space affected your business? What solutions have you used? Share your best practices with us! Let us know in the contact form to the right!

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