Omni-channel distribution, e-commerce and other current warehousing trends are making it tougher than ever to find available warehouse space. Cushman & Wakefield, a commercial real estates firm, tracks the national vacancy rate of warehouses, distribution centers and other logistics facilities, and for companies seeking available warehousing space, the news isn't good. A year ago, the overall national vacancy rate stood at 6.6%, which at the time was the lowest level since 2001. That rate has continued to fall over the past year, however, and now stands at 5.6%.
"For almost 20 years, from 1993-2011, U.S. industrial net absorption tracked GDP very closely, and the two metrics have had a tight correlation," notes John Morris, executive managing director and lead for Logistics and Industrial Services for the Americas. "Since 2011, however, this connection has been broken, as net absorption outperformed the economy. E-commerce, urbanization, last-mile, same-day delivery, and similar phenomena affecting our business, all of which are new, are busting older market paradigms, all to the benefit of the industrial real estate market."
California continues to be extremely tight in terms of available warehouse space, as half of the 10 toughest places are in the Golden State. Three other places in the top 10 are, like California, in warm weather climates in the Southeast.
While Cushman & Wakfield anticipates that overall supply will surpass demand in 2017, companies should expect upward pressure on rents at least until then.
Palm Beach and Lakeland both appeared on last year's list of the toughest places to find warehouse space. Though both cities are still relatively tough to find vacancies, neither made the top 10, though the cities of Fort Myers and Naples (shown) did edge their way into the list, with a current vacancy rate of 3.3%
There's been a steep decline in warehouse vacancies in Nashville over the past year, where the rate has dropped by more than 2 percentage points in 12 months, with the current rate standing at 3.3%.
The vacancy rate in Omaha is 3.2%, making it the 8th toughest place in the country to find available warehouse space.
The East Bay area of California, which includes Oakland (shown), isn't a whole lot easier to find warehouse vacancies than its northern California neighbors in San Francisco and San Jose, as the vacancy rate in East Bay is only 3.0%.O
Things have eased up slightly in the San Francisco Peninsula area of northern California, parts of which are considered Silicon Valley. Last year it was the the toughest place in the country to lease available warehouse space, with a vacancy rate of only 2.4%, but in 2016 the rate has risen half a percentage point to 2.9%.
Savannah, GA, home of one of the major U.S. East Coast seaports, is expected to be one of the beneficiaries of the expanded Panama Canal. Not surprisingly, warehouse space is scarce and at a premium in Savannah, where the vacancy rate is 2.3%.
San Jose, CA, which includes part of Silicon Valley, is not only one of the most expensive places to buy a home nationwide but is also one of the toughest to find warehouse space, with a vacancy rate of 2.3%
Orange County is just outside Los Angeles, and just as it was last year when its vacancy rate was 3.5%, Orange County is the third toughest market in the U.S. to find warehouse space, with a 2016 vacancy rate of 2.2%
In a state known for very tight inventory on available warehouse space, Los Angeles is the toughest place to go looking. Last year LA had a 3.0% vacancy rate, and the rate is currently less than half that, at 1.3%
While warehouse space is relatively plentiful in New England cities such as Boston, MA (6.8%) and Hartford, CT (11.7%), the toughest place in the entire U.S. is Providence, RI, with a vacancy rate of 0.2%, the statistical equivalent of next-to-none. If you're on the hunt for industrial real estate in Providence, good luck.
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