According to CBRE, the availability rate for U.S. industrial real estate declined by 8 basis points (bps) in the fourth quarter of 2018, while demand for warehouses exceeded the delivery of newly constructed supply by roughly 6 million square feet.
Availability of U.S. industrial real estate dipped to 7.0 percent in the fourth quarter, the lowest point since 2000. That marks 34 consecutive quarters of declining availability, the longest since CBRE started tracking the data in 1988.
Preliminary data show that net absorption across the 55 markets tracked by CBRE amounted to 63 million sq. ft. in the quarter, outpacing construction completions of roughly 57 million sq. ft.
"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 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 sq. ft., down from 9.3 million sq. ft. in the third quarter. However, quarterly data can be volatile. On a full-year basis, demand exceeded supply by 29 million sq. ft. 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.