Q4 2010 | INDUSTRIAL
NORTH AMERICA
HIGHLIGHTS
U.S. Industrial Market Finishes 2010 on a High Note Further Gains Anticipated in 2011 Ross J. Moore Chief Economist | USA
Relative to prior period
Q4 2010
Q1 2011*
VACANCY NET ABSORPTION construction rental rate *Projected
u.s. industrial market
Summary Statistics, Q4 2010
Vacancy Rate: 10.74% Change from Q3 2010: –0.22
The U.S. industrial market finished 2010 with a notable surge capping off three consecutive quarters of positive absorption. Solid demand for warehouse space in most regions coupled with minimal construction created the conditions for a sudden reversal in vacancy, and almost certainly heralds the beginning of the next cycle. The vacancy rate dropped nationally by nearly a quarter of a percentage point during the quarter—significantly more in select markets. Despite newfound optimism and a noticeable pick-up in leasing activity, warehouse rents fell over the quarter, dropping by 2.1 percent to $4.60 per square foot. With the economy registering healthy growth in the fourth quarter, and similar expansion anticipated in coming quarters, demand for warehouse space is expected to increase as the year progresses. A giant positive for industrial markets is the continued rise in import and export activity which continues to benefit not only key port markets, but also any distribution nodes that are part of the supply chain. Another positive for warehouse markets is manufacturing, which continues to show surprising growth as measured by the Institute for Supply Management (ISM) manufacturing index. For January the ISM manufacturing index registered 60.8—the highest level in nearly seven years and well above the critical 50 level that indicates expansion. As 2011 unfolds the industrial market is expected to improve on the back of a thriving manufacturing sector and further increases in global trade. Although signs of a true rebound in the warehouse market are still a few quarters away, almost all economic indicators suggest demand for warehouse space will only increase during 2011. With almost no new warehouse construction coming onto the market, even a modest bounce-back in demand will quickly
Under Construction: 22.7 Million Square Feet Asking Rents Per Square Foot: Average Warehouse/ Distribution Center: $4.60 Change from Q3 2010: –2.11%
www.colliers.com
Million Square Feet
Absorption: 28.6 Million Square Feet New Construction: 9.4 Million Square Feet
continued on page 7
U.S. INDUSTRIAL MARKET Q4 2009 – Q4 2010 30
12
20
11
10
10
0
9
-10
8
-20
Q4 2009
Q1 2010
Absorption
Q2 2010
Q3 2010
Completions
Q4 2010 Vacancy
7
Vacancy (%)
market indicators
Over the last three quarters, occupied space has increased by 42.7 million square feet, however, during the period Q2 2008 and Q1 2010 occupied space shrank by 209.9 million square feet.
highlights | Q4 2010 | industrial | north America
UNITED STATES | INDUSTRIAL SURVEY MARKET
Atlanta, GA Bakersfield, CA Baltimore, MD Boise, ID Boston, MA Charleston, SC Charlotte, NC Chicago, IL Cincinnati, OH Cleveland, OH Columbia, SC Columbus, OH Dallas/Ft. Worth, TX Denver, CO Detroit, MI Fairfield, CA Fresno, CA Ft. Lauderdale/Broward County, FL Greenville/Spartanburg, SC Hartford, CT Honolulu, HI Houston, TX Indianapolis, IN Jacksonville, FL Kansas City, MO-KS Las Vegas, NV Little Rock, AR Los Angeles – Inland Empire, CA Los Angeles, CA Louisville, KY Memphis, TN Miami, FL Nashville, TN New Jersey – Central New Jersey – Northern Oakland, CA Orange County, CA Orlando, FL Philadelphia, PA Phoenix, AZ Pleasanton/Walnut Creek, CA Portland, OR Raleigh, NC Reno, NV Sacramento, CA San Diego, CA San Francisco Peninsula, CA San Jose/Silicon Valley, CA Savannah, GA Seattle/Puget Sound, WA St. Louis, MO Stockton/San Joaquin County, CA Tampa Bay, FL Washington, DC West Palm Beach, FL
U.S. TOTAL p. 2
| Colliers International
EXISTING INVENTORY (SF) DEC. 31, 2010
588,384,000 31,466,000 224,045,000 31,909,000 155,986,000 32,024,000 282,509,000 1,312,700,000 254,878,000 418,008,000 35,509,000 205,421,000 750,421,000 277,478,000 480,580,000 38,904,000 48,600,000 126,385,000 170,450,000 96,975,000 38,530,000 474,722,000 274,027,000 120,450,000 174,061,000 107,554,000 45,056,000 379,098,000 879,573,000 167,562,000 196,788,000 226,047,000 158,293,000 357,793,000 373,657,000 131,233,000 200,950,000 144,357,000 421,082,000 245,457,000 32,225,000 174,413,000 101,500,000 73,732,000 182,249,000 188,521,000 40,808,000 253,311,000 43,511,000 291,496,000 261,205,000 92,563,000 214,839,000 206,729,000 58,796,000 12,894,820,000
NEW CONSTRUCTION Q4 2010 (SF)
0 0 1,515,000 0 0 10,000 51,000 549,000 156,000 14,000 0 0 0 13,000 240,000 0 0 0 127,000 0 0 207,000 1,329,000 240,000 50,000 0 0 667,000 200,000 0 32,000 62,000 2,045,000 176,000 0 0 375,000 0 46,000 391,000 0 60,000 30,000 0 0 54,000 0 0 538,000 0 0 0 0 147,000 30,000 9,354,000
NEW CONSTRUCTION ytd 2010 (SF)
2,900,000 530,000 386,000 131,000 0 1,440,000 201,000 2,667,000 156,000 571,000 206,000 47,000 0 890,000 301,000 363,000 0 69,000 0 0 0 2,225,000 1,580,000 240,000 50,000 341,000 253,000 667,000 510,000 0 470,000 407,000 924,000 844,000 0 0 495,000 0 926,000 1,763,000 74,000 60,000 97,000 0 53,000 311,000 0 0 538,000 0 148,000 16,000 0 475,000 30,000 24,355,000
CURRENTLY UNDER CONSTRUCTION (SF)
1,632,000 487,000 61,000 0 170,000 240,000 39,000 3,728,000 175,000 35,000 1,000,000 1,470,000 559,000 153,000 0 0 0 63,000 0 0 0 207,000 250,000 483,000 1,087,000 72,000 570,000 2,300,000 750,000 0 725,000 0 2,045,000 440,000 83,000 26,000 0 0 1,124,000 147,000 0 60,000 76,000 0 36,000 212,000 0 609,000 172,000 0 11,000 0 0 1,391,000 34,000 22,722,000
highlights | Q4 2010 | industrial | north America
UNITED STATES | INDUSTRIAL SURVEY MARKET
Atlanta, GA Bakersfield, CA Baltimore, MD Boise, ID Boston, MA Charleston, SC Charlotte, NC Chicago, IL Cincinnati, OH Cleveland, OH Columbia, SC Columbus, OH Dallas/Ft. Worth, TX Denver, CO Detroit, MI Fairfield, CA Fresno, CA Ft. Lauderdale/Broward County, FL Greenville/Spartanburg, SC Hartford, CT Honolulu, HI Houston, TX Indianapolis, IN Jacksonville, FL Kansas City, MO-KS Las Vegas, NV Little Rock, AR Los Angeles – Inland Empire, CA Los Angeles, CA Louisville, KY Memphis, TN Miami, FL Nashville, TN New Jersey – Central New Jersey – Northern Oakland, CA Orange County, CA Orlando, FL Philadelphia, PA Phoenix, AZ Pleasanton/Walnut Creek, CA Portland, OR Raleigh, NC Reno, NV Sacramento, CA San Diego, CA San Francisco Peninsula, CA San Jose/Silicon Valley, CA Savannah, GA Seattle/Puget Sound, WA St. Louis, MO Stockton/San Joaquin County, CA Tampa Bay, FL Washington, DC West Palm Beach, FL
U.S. TOTAL/AVERAGE
ABSORPTION Q4 2010 (SF)
ABSORPTION YTD 2010 (SF)
931,000 (76,000) 935,000 113,000 142,000 1,516,000 177,000 2,132,000 1,414,000 939,000 203,000 744,000 1,740,000 373,000 (3,685,000) (367,000) 100,000 232,000 137,000 6,000 (152,000) 354,000 (459,000) 403,000 859,000 (377,000) 1,254,000 6,756,000 1,501,000 76,000 (367,000) 395,000 (479,000) 1,927,000 847,000 (118,000) 662,000 534,000 1,808,000 1,393,000 401,000 346,000 (74,000) 274,000 (339,000) 820,000 374,000 699,000 1,118,000 703,000 353,000 (552,000) (225,000) (34,000) 177,000 28,564,000
934,000 3,000 2,328,000 477,000 167,000 2,621,000 (3,076,000) (2,380,000) 2,226,000 (1,737,000) 663,000 (767,000) 902,000 3,142,000 (3,895,000) (662,000) 215,000 1,035,000 (119,000) 6,000 6,000 4,761,000 (1,822,000) (32,000) 48,000 (1,177,000) 1,344,000 12,981,000 (4,885,000) (2,005,000) 875,000 2,706,000 (1,451,000) 1,787,000 2,005,000 (1,486,000) (68,000) 1,115,000 3,301,000 4,687,000 866,000 728,000 (220,000) 282,000 (1,632,000) 1,278,000 27,000 (3,869,000) (237,000) (241,000) 2,560,000 (1,324,000) (611,000) 512,000 771,000 23,663,000
VACANCY RATE SEP. 30, 2010 (%)
14.2 9.6 10.6 11.1 21.5 12.8 14.1 12.0 8.7 9.7 6.4 13.2 11.8 7.8 14.4 14.8 8.1 9.5 10.9 9.3 4.4 6.8 8.9 11.3 7.5 15.5 16.8 12.3 5.3 12.2 13.1 9.3 14.0 11.3 7.8 9.5 6.2 12.8 9.9 17.7 12.5 8.0 12.5 15.2 13.1 11.6 10.6 13.8 21.4 8.0 8.0 17.3 11.1 12.7 10.5 10.95
VACANCY RATE DEC. 31, 2010 (%)
14.0 9.7 10.6 10.9 21.4 11.2 14.0 11.7 8.1 9.5 7.0 12.7 11.6 7.7 15.4 15.8 7.9 9.4 10.6 9.3 4.7 6.2 9.0 11.1 7.0 15.8 14.0 11.1 5.2 12.2 13.3 9.1 13.9 10.8 7.6 9.5 5.8 12.4 9.4 17.2 11.2 8.1 12.4 14.9 13.3 11.3 9.7 13.0 19.3 7.8 7.9 17.9 11.2 12.8 10.3 10.74 Colliers International |
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highlights | Q4 2010 | industrial | north America
UNITED STATES | INDUSTRIAL SURVEY | SALES PRICE, CAP RATE AND LAND PRICE AS OF dECEMBER 2010 MARKET
SALES PRICE (USD PSF)
CAP RATE (%)
LAND PRICE (USD PSF)
LAND PRICE SUBMARKET
VACANCY FORECAST (3 MONTHS)
ABSORPTION FORECAST (3 MONTHS)
RENT FORECAST (3 MONTHS)
Atlanta, GA
35.37
9.00
1.00
Northeast Atlanta
Down
Up
Same
Bakersfield, CA
48.00
9.50
2.50
Bakersfield-North
Same
Same
Same
Boise, ID
45.00
1.75
Caldwell
Same
Same
Same
Boston, MA
40.00
3.75
Route 495
Down
Up
Same
Charleston, SC
45.50
7.75
2.65
Ladson
Down
Up
Up
Chicago, IL
43.00
7.15
5.25
I-55 Corridor
Same
Down
Same
Cincinnati, OH
43.40
8.00
1.72
Airport
Down
Up
Up
–
–
1.10
Lexington
Down
Up
Up
Columbus, OH
25.00
7.90
0.38
Southeast
Same
Same
Same
Dallas/Ft. Worth, TX
50.00
8.30
1.60
South Dallas
Down
Up
Up
Denver, CO
42.00
8.50
5.00
Northwest
Down
Up
Same
Detroit, MI
30.00
8.00
–
–
Up
Up
Down
Fairfield, CA
75.00
7.50
7.00
Napa, CA
Up
Same
Down
Fresno, CA
38.00
9.00
2.00
Southwest
Down
Up
Same Same
Columbia, SC
–
–
–
–
Same
Up
Greenville/Spartanburg, SC
30.00
10.00
0.86
–
Down
Up
Up
Hartford, CT
40.00
8.50
1.49
North of Hartford
Same
Same
Same Same
Ft. Lauderdale/Broward Co., FL
Honolulu, HI
–
–
–
–
Same
Same
Houston, TX
66.12
9.95
2.50
Northwest
Down
Same
Up
Indianapolis, IN
40.27
–
1.96
Park 100
Down
Up
Same
Jacksonville, FL
45.00
8.20
–
–
Down
Up
Same
Kansas City, MO-KS
–
–
–
–
Same
Same
Same
Las Vegas, NV
–
–
5.29
North Las Vegas
Up
Same
Down
Little Rock, AR
65.45
9.00
0.95
Port Industrial District
Down
Up
Same
Los Angeles – Inland Empire, CA
57.00
8.50
9.23
Riverside
Down
Up
Up
Los Angeles, CA
87.00
7.75
16.81
Industry
Same
Same
Same
Memphis, TN
25.00
9.50
1.25
DeSoto County
Down
Up
Same
Miami, FL
43.88
7.50
14.07
Various
Same
Up
Same
Nashville, TN
32.00
9.00
–
–
Up
Same
Down
New Jersey – Central
47.87
–
11.25
Exit 8A
Up
Same
Down
New Jersey – Northern
48.09
6.00
13.45
Hudson Waterfront
Same
Same
Down
Oakland, CA
62.94
7.00
12.95
Oakland, CA
Same
Same
Same
112.00
7.00
18.00
Central
Down
Up
Same Down
Orange County, CA Orlando, FL
36.77
–
–
–
Same
Up
Philadelphia, PA
57.00
8.50
3.10
Lehigh Valley
Down
Up
Same
Phoenix, AZ
71.00
9.50
2.30
West I-10
Down
Up
Down Same
–
–
6.80
Livermore
Same
Same
Portland, OR
67.27
8.45
14.98
–
Down
Up
Up
Reno, NV
24.92
–
2.38
TRIC
Down
Same
Same
Sacramento, CA
50.00
8.25
2.22
Roseville/Rocklin
Same
Same
Same
Poway
Down
Same
Same
–
Same
Same
Same Same
Pleasanton/Walnut Creek, CA
San Diego, CA
133.82
–
15.25
San Francisco Peninsula, CA
175.00
7.00
–
–
–
–
–
Same
Same
40.00
8.50
2.00
Westside
Down
Same
Same
193.74
7.43
4.70
Seattle/Puget Sound
Down
Up
Same
Stockton/San Joaquin County, CA
53.00
8.00
3.50
Stockton
Up
Down
Down
Tampa Bay, FL
Same
San Jose/Silicon Valley, CA Savannah, GA Seattle/Puget Sound, WA
49.01
7.70
–
–
Same
Up
Washington, DC
–
–
–
–
Same
Same
Up
West Palm Beach, FL
–
6.43
13.78
Various
Same
Same
Same
57.86
8.18
U.S. AVERAGE
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| Colliers International
highlights | Q4 2010 | industrial | north America
UNITED STATES | INDUSTRIAL SURVEY | RENTS AS OF DECEMBER 2010 MARKET
Atlanta, GA Bakersfield, CA Baltimore, MD Boise, ID Boston, MA Charleston, SC Charlotte, NC Chicago, IL Cincinnati, OH Cleveland, OH Columbia, SC Columbus, OH Dallas/Ft. Worth, TX Denver, CO Detroit, MI Fairfield, CA Fresno, CA Ft. Lauderdale/Broward County, FL Greenville/Spartanburg, SC Hartford, CT Honolulu, HI Houston, TX Indianapolis, IN Jacksonville, FL Kansas City, MO-KS Las Vegas, NV Little Rock, AR Los Angeles – Inland Empire, CA Los Angeles, CA Louisville, KY Memphis, TN Miami, FL Nashville, TN New Jersey – Central New Jersey – Northern Oakland, CA Orange County, CA Orlando, FL Philadelphia, PA Phoenix, AZ Pleasanton/Walnut Creek, CA Portland, OR Raleigh, NC Reno, NV Sacramento, CA San Diego, CA San Francisco Peninsula, CA San Jose/Silicon Valley, CA Savannah, GA Seattle/Puget Sound, WA St. Louis, MO Stockton/San Joaquin County, CA Tampa Bay, FL Washington, DC West Palm Beach, FL
U.S. AVERAGE Quarterly Change
WAREHOUSE/DISTRIBUTION SPACE (USD PSF)
3.08 4.00 4.66 4.50 4.50 3.65 3.34 3.84 2.93 3.46 3.75 2.49 3.00 3.50 3.97 5.28 2.40 6.67 2.75 4.28 11.88 4.96 3.71 3.50 3.97 4.80 2.67 3.60 5.64 3.34 2.54 6.80 3.99 4.66 5.93 4.32 6.96 4.57 4.00 5.42 4.80 4.97 3.95 3.48 4.41 7.92 9.24 4.44 3.95 5.62 3.93 3.96 4.20 7.74 7.14 4.60 -2.10%
BULK SPACE (USD PSF)
2.84 3.92 – 4.50 4.95 4.00 2.69 2.93 – 3.75 2.46 2.70 3.25 3.52 – 2.28 6.43 2.95 4.28 – 4.32 2.96 3.00 4.19 4.71 2.74 3.48 5.28 – 2.49 7.04 3.13 3.77 5.63 2.88 5.76 4.11 3.75 4.18 4.20 4.64 – 3.20 3.77 7.08 9.24 5.04 3.75 – – 3.48 3.96 – 6.40 4.13 -2.02%
FLEX/SERVICE SPACE (USD PSF)
7.29 7.00 9.91 6.30 7.50 6.00 8.64 8.30 6.12 8.09 – 4.68 6.80 8.50 8.17 10.92 4.00 9.40 7.00 6.75 – 6.79 8.77 9.00 7.04 6.48 7.35 6.66 11.20 7.33 7.35 11.20 7.38 11.90 10.89 4.80 12.95 8.68 7.00 10.98 12.60 8.88 9.13 6.24 8.40 11.40 21.24 6.84 7.00 10.12 9.66 5.52 8.24 12.03 10.36 8.54 0.51%
TECH/R&D SPACE (USD PSF)
7.33 – – 6.30 9.50 16.25 – 6.12 – 9.50 4.68 8.40 9.50 – – 5.50 9.75 17.00 6.75 – 8.40 – – 7.04 10.56 – 10.00 13.15 7.33 10.00 11.92 – 12.89 5.94 8.04 13.75 8.94 11.00 10.73 – 5.95 – 9.84 9.84 14.28 21.24 10.92 10.00 – – 7.44 9.36 – 14.71 10.00 -2.10% Colliers International |
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highlights | Q4 2010 | industrial | north America
CANADA | INDUSTRIAL SURVEY EXISTING INVENTORY (SF) DEC. 31, 2010
MARKET
122,107,000 77,072,000 7,075,000 347,771,000 28,027,000 16,175,000 19,700,000 760,332,000 178,640,000 61,180,000 79,308,000 1,697,387,000
Calgary, AB Edmonton, AB Halifax, NS Montreal, QC Ottawa, ON Regina, SK Saskatoon, SK Toronto, ON Vancouver, BC Waterloo Region, ON Winnipeg, MB
CANADA TOTAL
NEW CONSTRUCTION Q4 2010 (SF)
NEW CONSTRUCTION ytd 2010 (SF)
0 230,000 5,000 0 75,000 0 60,000 120,000 0 0 – 490,000
CURRENTLY UNDER CONSTRUCTION (SF)
740,000 730,000 102,000 180,000 176,000 600,000 190,000 1,551,000 0 223,000 118,000 4,610,000
957,000 113,000 0 24,000 75,000 532,000 170,000 958,000 1,702,000 135,000 136,000 4,802,000
CANADA | INDUSTRIAL SURVEY MARKET
Calgary, AB Edmonton, AB Halifax, NS Montreal, QC Ottawa, ON Regina, SK Saskatoon, SK Toronto, ON Vancouver, BC Waterloo Region, ON Winnipeg, MB
CANADA TOTAL/AVERAGE
ABSORPTION Q4 2010 (SF)
ABSORPTION YTD 2010 (SF)
(778,000) 401,000 34,000 878,000 140,000 58,000 (32,000) (1,484,000) 449,000 498,000 – 164,000
3,743,000 1,691,000 227,000 1,905,000 148,000 1,255,000 420,000 4,092,000 3,331,000 (336,000) 303,000 16,779,000
VACANCY RATE SEP. 30, 2010 (%)
VACANCY RATE DEC. 31, 2010 (%)
4.7 4.3 5.4 6.4 6.3 1.7 2.5 5.8 4.0 9.4 – 5.52
5.4 4.1 5.0 6.2 5.8 1.3 2.7 6.0 4.1 8.4 3.0 5.56
CANADA | INDUSTRIAL SURVEY | SALES PRICE, CAP RATE AND LAND PRICE AS OF DECEMBER 2010 MARKET
SALES PRICE (CAD PSF)
CAP RATE (%)
LAND PRICE (CAD PSF)
LAND PRICE SUBMARKET
VACANCY FORECAST (3 MONTHS)
ABSORPTION FORECAST (3 MONTHS)
RENT FORECAST (3 MONTHS)
105.00 – 86.00 85.00 85.00 73.00 110.00 64.52 125.00 65.00 75.00 87.35
7.00 – 8.13 8.25 8.13 7.80 7.50 6.98 6.50 7.50 7.75 7.55
12.05 14.60 4.25 11.00 6.75 5.75 9.11 9.88 22.50 7.46 11.40 10.43
Great Plains (SE) Southeast Burnside Industrial Park St-Laurent Central Ottawa Ross Industrial Park Marquis Caledon Metro Vancouver Cambridge Southwest
Up Down Down Down Same Same Up Down Same Down Down
Up Up Up Up Same Same Up Same Up Up Up
Up Same Up Up Up Up Same Up Same Up Same
Calgary, AB Edmonton, AB Halifax, NS Montreal, QC Ottawa, ON Regina, SK Saskatoon, SK Toronto, ON Vancouver, BC Waterloo Region, ON Winnipeg, MB
CANADA AVERAGE
CANADA | INDUSTRIAL SURVEY | RENTS AS OF DECEMBER 2010 MARKET
Calgary, AB Edmonton, AB Halifax, NS Montreal, QC Ottawa, ON Regina, SK Saskatoon, SK Toronto, ON Vancouver, BC Victoria, BC Waterloo Region, ON Winnipeg, MB
CANADA AVERAGE Quarterly Change
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| Colliers International
WAREHOUSE/DISTRIBUTION SPACE (CAD PSF)
BULK SPACE (CAD PSF)
FLEX/SERVICE SPACE (CAD PSF)
TECH/R&D SPACE (CAD PSF)
7.75 6.80 7.00 4.00 7.25 8.50 9.00 4.98 6.50 12.00 4.07 4.50 6.86 0.77%
6.50 6.15 5.50 4.00 6.25 6.50 8.00 4.56 5.75 10.00 3.54 4.00 6.07 -0.85%
9.50 8.15 8.95 6.50 8.25 12.00 11.00 7.15 8.50 13.00 8.33 7.00 9.21 0.90%
10.50 8.40 13.95 8.50 11.00 14.00 13.00 7.75 9.25 13.00 8.33 8.00 10.70 0.93%
highlights | Q4 2010 | industrial | north America
U.S. INDUSTRIAL space under CONSTRUCTION BY TYPE – Q4 2010 Square Feet 0
1,000,000
2,000,000
Chicago, IL Los Angeles – Inland Empire, CA Nashville, TN Atlanta, GA Columbus, OH Washington, DC Philadelphia, PA Kansas City, MO-KS Columbia, SC Los Angeles, CA Memphis, TN San Jose/Silicon Valley, CA Little Rock, AR Dallas/Ft. Worth, TX Bakersfield, CA Jacksonville, FL New Jersey – Central Indianapolis, IN Charleston, SC San Diego, CA Houston, TX Cincinnati, OH Savannah, GA Boston, MA Denver, CO Phoenix, AZ New Jersey – Northern Raleigh, NC Las Vegas, NV Ft. Lauderdale/Broward Co., FL Baltimore, MD Portland, OR Charlotte, NC Sacramento, CA Cleveland, OH West Palm Beach, FL Oakland, CA St. Louis, MO
3,000,000
4,000,000
Spec Build-to-Suit
Square Feet 1,000,000
2,000,000
3,000,000
4,000,000
Vancouver, BC Toronto, ON
Spec
Calgary, AB
Build-to-Suit
Winnipeg, MB Waterloo Region, ON Edmonton, AB Ottawa, ON Montreal, QC
translate into stronger fundamentals. Rents, however, are unlikely to firm up until vacancies drop below 10.0 percent, which should occur by yearend. For most landlords and investors, the best that can be hoped for is rising occupancy and fewer incentives. For tenants, 2011 is an opportune time to sign a new lease, as 2012 will almost certainly be the inflection period when warehouse rents begin their upward march.
Warehouse construction still at low levels but up from previous quarter. Fourth quarter completions totaled 9.4 MSF, a substantial increase from the third quarter when 4.4 MSF were delivered to the market, and a modest increase from 7.0 MSF completed in Q4 2009. Of the 9.4 MSF delivered, 71 percent was build-to-suit and 29 percent was speculative construction. In the coming quarters construction is anticipated to be largely build-to-suit, with only 15 percent under construction at year-end classified as speculative. Quarter-end construction activity totaled 22.7 MSF, a modest increase from 18.6 MSF underway at the end of the third quarter but well below the 107.0 MSF recorded two years ago. Canadian construction remained subdued with merely 500,000 square feet completed in Q4 bringing annual construction to 4.6 MSF. In 2009 Canadian warehouse construction totaled 15.7 MSF.
0
Saskatoon, SK
Continued from page 1
Occupancies rise for third consecutive quarter. For the third consecutive three-month period, industrial markets registered an increase in occupied space. For the fourth quarter, net absorption totaled 28.6 million square feet (MSF)—a large increase from the third quarter, when occupied space increased by just 3.6 MSF, and in sharp contrast to the 17.6 MSF of industrial space returned to the market in the Q4 2009. For the year, absorption totaled 23.7 MSF compared with –160.7 MSF in 2009. Of the 55 markets tracked in the U.S., 33 reported positive absorption during the fourth quarter; however, sizeable gains in four (Inland Empire, New Jersey, Chicago and Dallas) of the Big Five markets drove up the national number. Canadian markets ended the year on a somewhat muted note, however, full-year absorption totaled 16.7 MSF, a stark turnaround from 2009 when occupied space shrank by 700,000 square feet.
CANADA INDUSTRIAL SPACE UNDER CONSTRUCTION BY TYPE – Q4 2010
Regina, SK
U.S. Industrial Market Finishes 2010 on a High Note
U.S. industrial vacancy rate registers sharp drop during the quarter. The U.S. industrial warehouse vacancy rate dropped 22 basis points during the fourth quarter to register 10.74 percent. After a very slight increase in the third quarter, this brings the national vacancy rate back to where it began the year. Vacancies in many markets appear to have peaked and are expected to drift lower over the coming quarters. About three of every four tracked U.S. markets (41 out of 55) saw vacancy decrease in Q4 while the balance registered no change or a modest increase. Canadian warehouse vacancies were little changed, increasing by just 4 basis points during the quarter to average 5.56 percent. Rents continue to go lower despite a pick-up in demand. In spite of improvements in demand for industrial warehouse space, industrial rents moved lower during the fourth quarter. Warehouse rents fell 2.1 percent to register $4.60 per square foot while bulk rents dropped 2.0 percent to average $4.13 per square foot, flex rents marginally increased $0.04 to $8.54 per square foot and R&D rents slipped $0.21 to $10.00 per square foot. Canadian industrial rents largely held steady during the quarter with warehouse, bulk, R&D and flex all registering increases/decreases of less than 1.0 percent.
Colliers International |
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highlights | Q4 2010 | industrial | north America
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Glossary Absorption—Net change in leased space over a given period of time. Bulk Space—100,000 square feet or more with up to 10 percent office space, the balance being general warehouse space with 20- to 36-foot ceiling heights. All loading is dock-height. Flex Space—Single-story buildings having 10- to 18-foot ceilings with both floor-height and dock-height loading. Includes wide variation in office space utilization, ranging from retail and personal service through distribution, light industrial and occasional heavy industrial use. Inventory—Includes all existing multi- or singletenant leased and owner-occupied industrial warehouse, light manufacturing, flex and R&D properties greater than or equal to 10,000 square feet. New Construction—Includes completed speculative and build-to-suit construction. New construction quoted on a net basis after any demolitions or conversions. Service Space—Single-story (or mezzanine) with 10- to 16-foot ceilings with frontage treatment on
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one side and dock-height loading or grade level roll-up doors on the other. Less than 15 percent office. Tech/R&D—One- and two-story, 10- to 15-foot ceiling heights with up to 50 percent office/dry lab space (remainder in wet lab, workshop, storage and other support), with dock-height and floorheight loading.
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Triple Net Rent—Includes rent payable to the landlord and does not include additional expenses such as taxes, insurance, maintenance, janitorial and utilities. All industrial and high-tech/R&D rents in this report are quoted on an annual, triple net per square foot basis in U.S. dollars. Vacancy Rate—Percentage of total inventory available (both vacant and occupied) at the survey date including direct vacant and sublease space. Warehouse—50,000 square feet or more with up to 15 percent office space, the balance being general warehouse space with 18- to 30- foot ceiling heights. All loading is dock height.
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