Prime Logistics Rents Accelerate Globally Amid E-Commerce Growth
Michael Tucker firstname.lastname@example.org
Prime logistics rents--the highest achievable lease rates for top-quality warehouse and distribution center space--increased globally in the fiscal year ending March 31, reported CBRE, Los Angeles.
CBRE credited strengthening economies around the world and greater demand for distribution of goods bought both online and in stores for the rental-rate increases. Prime logistics rents increased 3.2 percent in this year's first quarter compared to a year earlier, exceeding the previous 12-month period's 2.2 percent global increase.
"This is a positive indicator that we're still seeing global growth roughly six years after the U.S. market for industrial and logistics real estate began its recovery from the recession," said CBRE Global Head of Industrial and Logistics Research David Egan. "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."
The U.S. hosts three of the 10 metros that registered the largest prime logistics rent increases, CBRE said. U.S. cities that ranked in the top 10 included Oakland with a 14 percent increase year-over-year, Seattle with a 13.4 percent gain and New Jersey, where prime logistics rents increased 9.5 percent.
Vancouver, Canada, was the biggest gainer globally with a 29.1 percent year-over-year increase, largely due to its lack of land available for industrial development and its growth as Canada's largest port.
Egan noted prime logistics rents offer a way to gauge the strength and momentum of high-end warehouse markets. "That the growth of prime logistics rents has accelerated globally bodes well for the industry's continued momentum," he said.
Regionally, the Europe-Middle East-Africa region posted a 4.3 percent gain in prime logistics rents. "Much of EMEA's increase can be attributed to improving economies in that region and resulting gains in consumption," the report said. The Americas registered a 3.8 percent gain, on par with its increase of the previous year. Asia notched a 2.2 percent gain.
In the U.S., prime logistics rents increased 4.8 percent on average in the year ended March 31, propelled by gains in coastal markets, said CBRE Americas Leader of Industrial and Logistics Adam Mullen.
"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," Mullen said. "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."