Report: Availability of U.S. warehouse space last year was the lowest since 2000

The availability of industrial space fell to 7 percent in fourth quarter 2018, the lowest point since 2000, while demand for warehouses exceeded the delivery of newly constructed supply by roughly 6 million square feet, according to CBRE.

That marks 34 consecutive quarters of declining availability, the longest since CBRE started tracking the data in 1988.

Preliminary data show net absorption across the 55 markets tracked by CBRE amounted to 63 million square feet in the quarter, outpacing construction completions of roughly 57 million square feet.

“Construction has picked up, but the long-term demand drivers of e-commerce and the strong U.S. economy have more than offset that supply gain,” said Richard Barkham, CBRE’s global chief economist. “While factors such as higher interest rates and trade-protection worries are headwinds, the U.S. industrial real estate market will continue to draw momentum from the healthy U.S. labor-market, brisk import activity aided by the strong dollar and robust consumer confidence.”

The gap between demand for warehouses and newly delivered supply narrowed in the fourth quarter to 6.2 million square feet, down from 9.3 million square feet in the third quarter. Quarterly data can be volatile, however. On a full-year basis, demand exceeded supply by 29 million square feet in 2018.

CBRE defines availability as the sum of vacant space plus space that is currently occupied but otherwise being marketed for use by new tenants. In the fourth quarter, 38 of the markets posted declines in industrial availability from the third quarter, 20 reported increases, and six remained unchanged.