INSIDE LOOK – INDUSTRIAL MARKETS

Amanda Ortiz

National Director, Industrial Research amanda.ortiz@colliers.com

An Inside Look at the Top 25 U.S. Industrial & Logistics Markets

The markets that move America.

Our Winter 2020 Top 25 Industrial Markets Report looks closely at the top 25 U.S. industrial markets and the key factors that shaped them through the third quarter of 2020, such as inventory, vacancy, absorption, rents and construction, among others. Inventory by region is heavily weighted in the Midwest, where more than 32% of the total U.S. product is concentrated, with the South coming in at a distant second with more than 28% of all industrial inventory. None of the markets tracked in this report had vacancy that exceeded 10%. Additionally, the top five markets for product under construction each delivered more than 14 million square feet year-to-date.

Colliers International tracks a total of 76 industrial markets in the U.S. For the 25 markets covered in this report, the composition by geography is heavily weighted in the Midwest where 32.6% of the inventory is concentrated. The South region comes in at a distant second with 28.1% of all industrial inventory.

None of the markets tracked in this report had vacancy that exceeded 10%. Despite healthy absorption levels, markets including Dallas-Fort Worth, Houston and Phoenix reported vacancy higher than 7%.

The top five markets for product under construction each delivered more than 14 million square feet yearto-date. Those top 5 markets - Dallas-Fort Worth, Chicago, Atlanta, Greater Los Angeles and Houston – each have more than 16.5 million square feet under construction.

Three of the top 25 markets reported negative absorption year-to-date. Despite this, two of those markets - South Florida and the San Francisco Bay area - delivered more than 3.5 million square feet, indicating that developer confidence in industrial space has not waned.

14.5%

24.8% 32.6%

28.1%

RENT HIGHLIGHTS

Average U.S. overall asking rents have increased for 10 consecutive quarters and measured $7.21 per square foot at the end of the third quarter - a 2.6% increase over the previous quarter, and a 5.6% increase year-over-year. This rise in rents is attributed, in part, to the large influx of new industrial supply over the past year - particularly modern distribution facilities.

Eight markets posted average asking rents higher than the national average and most are regions where pricing premiums are standard. The San Francisco Bay area, the New York City Metro area and the Washington, D.C. markets posted some of the highest average industrial rents in the country each coming in at more than $10 per square foot.

Three industrial markets posted year-over year asking rent increases greater than 10%- Dallas-Fort Worth, Detroit and Philadelphia. With the Dallas market at the top of both product under construction and new supply lists, it’s little surprise that rents are rising as occupier demand for space in Dallas is incredibly high.