CBRE Finds Increases In Prime Logistics Rents Have Accelerated Globally Amid Growth Of E-Commerce, Regional Economies
19 7月 2018
Prime logistics rents increased globally in the year ending March 31, accelerating their growth in many markets, due to strengthening economies around the world and greater demand for distribution of goods bought both online and in stores, according to a new report from CBRE.
Prime logistics rents – which are the highest achievable lease rates for top-quality warehouse and distribution-center space – increased by 3.2 percent across the globe in this year’s first quarter from a year earlier, according to CBRE. That exceeds the previous 12-month period’s 2.2 percent global increase.
The Inland Empire is among the top five growth markets on the West Coast with strong gains last year and prime rent growth of 5% or more.
“The Inland Empire is experiencing a surge in container volumes from the ports, buoyed by consumer demand for adequate industrial product, coupled with a slowing supply of space,” said Dan de la Paz, executive vice president at CBRE’s Ontario office. “Plus, land values continue to escalate rapidly and are expected to increase 20 percent and more within the next 12 months.”
He added, “Construction costs are also rising 7-10% year over year. So, in short, because we have more demand than supply, plus rising costs, we are anticipating continued strong rent growth in the Inland Empire.”
The Inland Empire ranked number twelve (6.7 percent increase) on the top global logistics hubs registering the largest gains in prime logistics rents in the year ending March 31. The biggest gainer globally was Vancouver, which posted a 29.1 percent increase due to its lack of land available for industrial development amid its growth as Canada’s largest port. Other U.S. cities ranked in the top 10 are Oakland (14 percent increase), Seattle (13.4 percent gain) and New Jersey (up 9.5 percent).
Prime logistics rents offer a means of gauging the strength and momentum of the high end of warehouse markets across the globe. That the growth of prime logistics rents has accelerated globally bodes well for the industry’s continued momentum.
“This is a positive indicator that we’re still seeing global growth roughly six years after the U.S. market for Industrial & Logistics real estate began its recovery from the recession,” said David Egan, CBRE’s Global Head of Industrial & Logistics Research. “This underscores the theory that e-commerce-driven demand for logistics facilities has created a fundamental shift in this market, establishing new baselines for occupancy, rents and other measures.”
CBRE examined rents in 71 global logistics hubs for its report. The company defines prime logistics rents as the highest achievable rent for industrial distribution space of the highest quality and specification in the best location within each market.
In the U.S., prime logistics rents increased by an average of 4.8 percent in the year ended March 31, propelled by gains in coastal markets.
“The three U.S. markets with the biggest increases in prime logistics rents – Oakland, Seattle and New Jersey – each are near busy seaports but have little land available for industrial development,” said Adam Mullen, CBRE Americas Leader of Industrial & Logistics. “Other Americas markets within the top 25 gainers also are tied to busy seaports, including California’s Inland Empire, South Florida, Houston, Los Angeles and Montreal.”
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CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.