Consumerism drives the I&L sector

Omnichannel retail and the growth of e-commerce have been the primary drivers of demand during this cycle for the industrial and logistics (I&L) sector, according to CBRE. Consumer requirements for speedy service have forced everyone in the retail supply chain — manufacturers, suppliers, distributors and retailers — to carry more inventory in more locations. Last-mile delivery has been a key focus, generating greater requirements for urban logistics space, such as multistory warehouses in densely populated areas.

Land-constrained markets continue to command a significant rent premium over other markets. These include Hong Kong ($30.99 per square foot), London ($22.35 per square foot), and Greater Tokyo ($19.96 per square foot). Of the top-10 most expensive markets, nine are in EMEA, or Asia Pacific. And four of the top-10 growth markets are in the Americas (Vancouver, Oakland, Seattle and New Jersey). These metropolitan areas are experiencing tightening fundamentals amid strong demographics and e-commerce growth.

In the Americas, prime I&L rents increased in the majority of markets, with exceptionally high growth in western coastal cities. Overall, prime rents in the Americas increased 3.8 percent year-over-year during first quarter 2018, consistent with the previous year. In the United States, prime rent growth averaged 4.8 percent year-over-year during the first quarter, compared with 5.9 percent a year ago. Demand continues to outpace supply, with net absorption exceeding delivers by 9.9 percent (20 million square feet) in the past 12 months.

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