2017 was a record year for the industrial real estate market in the United States. Globally industrial real estate rental rates rose by 7% with the United State topping the charts with 9% growth. As supply in the market remains low, demand remains high, and nationally vacancy rates for industrial, warehousing, and flex spaces are at historic lows; what can buyers and lessees expect to see in 2018?
Real estate is a local industry, and on-site expertise is fundamental to understanding an individual market since growth rates unquestionably vary enormously. Nonetheless, while each industrial market possesses meaningful regional and sub-regional differences; there remains a few consistent trends in the industrial real estate market. Overall, the tightening of supply in 2017 is likely to continue into 2018 and beyond.
What does this mean for buyers and lessees looking to enter the market in 2018 and early 2019? As low vacancy rates continue, renters and buyers should expect to face increasing competition for space. Moreover, as demand remains high and supply remains low, buyers will be forced to act quickly to secure premium industrial, warehousing, and flex spaces. Furthermore, if high barriers to development remain in place, and the supply of available industrial real estate remains constricted by geographic, legislative, and economic deterrents; buyers and lessors should expect to pay premium prices for industrial space.
As we remain in a lessors market, customers looking to secure quality industrial space that meets their business’s needs will need to act swiftly and decisively when suitable properties come on the market. Although some prospective lessees and purchasers may find the market untenable in 2018, forward-thinking and educated customers who act quickly will continue to find properties that meet their business requirements at an attractive price point.