Q4 2016 U.S. Industrial Market Outlook Report

by CoyDavidson on February 23, 2017

2016 Industrial Momentum Lays the Groundwork for 2017

In 2016, the U.S. industrial market completed its second consecutive year of record-breaking activity with every key indicator reaching all-time highs. Colliers’ Q4 2016 U.S. Industrial Market Outlook Report examines the way e-commerce has made industrial the darling of commercial real estate, creating robust demand for big-box buildings in core industrial markets, last-mile distribution centers in secondary markets and industrial flex space in urban areas.

All in all, 2016 set the bar high for industrial market performance. But 2017 may prove to be another landmark in the record-setting pace that industrial has established in recent years.

U.S. Industrial Market (Q4 2014 to Q4 2016)

Key takeaways from this report include:

  • E-commerce sales grew 14% in Q4 2016 compared with Q4 2015, and now represent 8.4% of total retail sales. E-commerce will continue to be a driving force for industrial real estate in 2017.
  • At year-end 2016, only 5.6% of the nation’s industrial space was vacant — the lowest rate on record despite 246 million square feet of new supply completing in 2016. Product under construction also increased by a whopping 38 million square feet in 2016 to reach 230 million square feet — the most annual product under construction ever.
  • Manufacturing space — and warehouse space that can handle a manufacturing component — is a product type to watch in the coming year. In January 2017, the ISM Manufacturing Index rose to its highest level in two years as production and new orders surged. With “reshoring” on the rise due to consumer habits and anticipated government policies, industrial real estate with a manufacturing component will likely see increased demand in the coming year.
  • Flex space will continue to be a star for both investors and occupiers in 2017, especially in urban markets with younger populations. The push to service this population base will likely lead to a pickup in modern flex space construction as well as conversions of older industrial product within in-fill locations.
  • Tightening markets and new, higher-quality class A space drove up asking rents to $5.81 per square foot per year in Q4 2016, an all-time record for the country (not adjusted for inflation). 2017 is anticipated to be another year of record development, which will likely slow the rate of growth in asking rents.
  • More than $59 billion in industrial assets changed hands in 2016, among the highest annual totals ever. However, transaction levels were down from 2015 due to a significant pullback in large portfolio sales. We anticipate a pickup in large portfolio transactions in 2017 with Global Logistics Properties, the second-largest industrial owner in the nation, currently shopping its U.S. portfolio.

 Click here to download the full report.

You might also like:

Get my posts via e-mail: here

{ 0 comments }

Houston Healthcare Real Estate Market Report | Year-End 2016

February 19, 2017

Healthcare Trends Houston’s healthcare industry remains strong and continues to be a major driver of development and employment. More than 325,000 Houstonians work in healthcare, the city’s second largest employment sector. From December ’14 to October ’16, a period when mining and logging lost nearly 25,000 jobs due to the energy downturn, health care created […]

Read the full article →

Texas Office Market Update | Q4 2016

February 15, 2017

The State of the Texas Office Market The cyclical slowdown continued across major office markets in the United States, with more than half the markets seeing an increase in vacancy amid slowing leasing activity. The major Texas office markets were not immune from this trend. The Austin office market remains strong but appears to be […]

Read the full article →

DFW Office Market Report | Q4 2016

February 13, 2017

Sales surge, rates rise, but absorption eases to close 2016 The fourth quarter of 2016 wrapped up a strong year for the Dallas-Fort Worth real estate market in terms of office sale activity, but moderate in terms of leasing. After seeing over 6.4 million square feet of absorption in 2015, the highest in almost a […]

Read the full article →

Q4 2016 U.S. Top Office Metros Snapshot

February 8, 2017

Rents Hold Steady Despite Softening Fundamentals The Q4 2016 U.S. Top Office Metros Snapshot report shows that while most metros saw positive absorption in the fourth quarter, overall net absorption is down year over year. Growth, albeit slowing, should continue this year, with U.S. office-using employment growth expected to fall from 2.4% in 2016 to […]

Read the full article →

Disclaimer: All blog entries on this site are the opinion of the author and not those of either Colliers International - Houston or Colliers International (collectively, "Colliers"). Colliers neither endorses, sponsors nor necessary shares the opinions of the author, regardless of whether any blog is posted by any employee, officer, agent, or representative of Colliers. Colliers has not authorized or verified any statement of fact made in a blog, and any such statement does not constitute a statement of fact by Colliers. Colliers is not responsible for the monitoring or filtering of any blog, nor does Colliers claim ownership or control over any blog content.