Net absorption of warehousing and manufacturing space in the U.S. has been positive for 19 consecutive quarters, yet continued improvement is expected at least through 2015.
The main drivers of industrial real estate; cargo volumes at seaports, rail freight volumes, gains in gross domestic product, increasing retail sales and a gradually improving housing market, all indicate that the trend will continue.
Although the industry is feeling good about itself, expansion will be measured and steady, and overbuilding will be avoided. Institutional investors, as well as investors from overseas, will create a more disciplined investment environment.
61.2 million square feet of industrial space was absorbed in the fourth quarter of 2014, an increase of 20.9 percent compared to the same quarter in 2013. For the whole year, 215 million square feet of industrial space was absorbed nationwide, an increase of 27.6 percent from 2013. Although, each region is different, and as soon as softness is detected in a market, new construction slows down.
Even with the recent tumble in oil prices, companies leasing industrial properties will focus on transportation costs. Therefore, locations that offer logistical advantages including proximity to seaports, rail hubs and large population centers will continue to lead the way.
