industrial market outlook
TRANSCRIPT
United States Research Report
INDUSTRIAL MARKET OUTLOOKQ1 2016
Key Takeaways > The U.S. industrial vacancy rate declined for the 22nd consecutive quarter to 6.3%, 10 basis points (bps) lower than the previous quarter and 70 bps lower than this time last year. This is the lowest vacancy rate in over a decade.
> Occupier demand continues to outpace new supply. Over 63.8 million square feet (MSF) absorbed in Q1, on par with the previous quarter and an impressive 9.6% higher than this time last year.
> New supply from construction completions increased in Q1 to 60.1 MSF, the most for a quarter on record. New supply represents 0.40% of the total existing inventory, the highest since Q4 2007’s record setting 0.47% of inventory. Developer’s confidence continues to increase as 60.7% of new supply was speculative.
> Lower vacancies increased asking rates for the 18th consecutive quarter. Asking rates for Q1 16 stand at $5.52 per square foot (psf), 15 bps higher than the previous quarter and 72 bps higher than this time last year. Despite these gains, asking rents are below the all-time high of $5.63 posted in Q2 2008.
> Chicago dominated Q1 16 with over 8.7 MSF of occupancy gains or 13.8% of the U.S. total. Dallas-Ft.Worth, Inland Empire, Atlanta, and Philadelphia, all posted robust absorption in Q1 with occupiers continuing to locate consolidated distribution hubs in these regions.
> Charleston and Savannah, two port markets looking to take advantage of the Panama Canal expansion, led the nation in absorption as a percent of inventory. Both finished the first quarter at 2.7% and 1.9%, respectively.
> Colliers’ Q1 16 industrial survey remained optimistic. Of the 70 U.S. markets surveyed, over 63% expect industrial rents to rise in the coming quarters. 47% of the responders expect vacancies to tighten, with the Northeast region most bullish at 78%.
> Demand drivers for industrial real estate are sound. While the economy faces significant headwinds, the need for modern industrial space will keep absorption positive and rents ascending for the foreseeable future.
U.S. Industrial Market Healthy Despite Economic Headwinds James Breeze National Director of Industrial Research | USA
Summary Statistics, Q1 2016 United States Industrial Market
Vacancy Rate 6.3% Change from Q4 2015 (Basis Points)
-10
Absorption (MSF) YTD Absorption
63.9
New Supply (MSF) YTD New Supply
60.1
Under Construction (MSF) 185.5
ASKING RENTS PER SQUARE FOOT PER YEAR
Average Warehouse/Distribution Center
$5.52
Change from Q4 2015
1.5%
Market IndicatorsRelative to prior period
Q1 2016
Q2 2016*
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE**
* Projected, relative to prior period** Warehouse rents
U.S. Industrial Economic Indicators
GDP
Q1 2016 +0.5% in Q1
Q4 2015 +1.4% in Q4 2015 (adjusted)
ISM
Apr-16 PMI® Apr-16 PMI 50.8, down 1 pctg. Pt. from Mar-16
RAIL TIME INDICATORS: AAR.ORG
Total Railcar Traffic - 14.3% since Apr-15
Intermodal Traffic -0.8% since Apr-15
2 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International
Sources: BEA, ISM, AAR
from the March reading of 51.8%, but the second consecutive month PMI® registered over 50%, following five straight months of reading under 50.0%. A reading over 50% indicates that the manufacturing economy is expanding.
Port activity, another major contributor to industrial real estate fundamentals, started 2016 strong. The Ports of Los Angeles and Long Beach recorded a robust first quarter with the Port of Los Angeles posting the strongest quarter in its 109-year history. The Ports of New York/New Jersey, Seattle/Tacoma, Virginia, Oakland, and Jacksonville all posted calendar year-over-year gains in the first quarter. The Panama Canal expansion, which is set to open in June 2016, will bring minor volume improvements to east coast ports in the near term. Long-term growth will accelerate following the completion of improvements that are underway in many east coast ports to increase capacity and service post-panamax vessels traveling through the canal.
The U.S. industrial market continues to improve, posting lower vacancies, robust occupancy gains, and a record amount of new construction to quench increased demand from occupiers looking to modernize and improve their logistics capabilities. This led to a 1.5% increase in asking rents compared with the previous quarter.
The rapid increase in new supply does warrant some caution. Post-recession, developer discipline kept speculative construction in check and absorption significantly higher than new supply. The trend could reverse in upcoming quarters. Now over 185 MSF is under construction, the majority of it speculative. The good news is over 40% of the product under construction is located in markets with robust occupancy gains including Dallas (12.9%), Inland Empire (8.7%), Atlanta (6.9%), Houston (6.6%), and Chicago (6.2%).
Industrial Economic Indicators The U.S. economy continued a trend of slow Q1 growth with the advance estimate for GDP expanding at an anemic 0.5%, 90 basis points (bps) lower than adjusted GDP of 1.4% in Q4 15. The fall in GDP was a result of lower consumer spending, a decline in business investment, and a shaky world economy reducing U.S. exports in Q1.
Despite the rocky start, economic fundamentals relating to industrial real estate were healthy. Nonfarm payroll jobs rose by 160,000 in April, with an average of just under 200,000 jobs added the first months of 2016. Over the past year, an impressive 2.7 million jobs were added in the U.S. The trade, transportation, and utilities sector, the heaviest user of industrial space, added 475,000 jobs with construction adding 260,000 payrolls over the same time period.
Manufacturing fundamentals were mixed. Employment growth has been negative three of the past seven months, for a total decline of 19,000 year-over-year. However, manufacturing expanded in April as the PMI ® registered 50.8%, a decrease of one percentage point
N O R T H E A S T
S O U T H
M I D W E S T
W E S T
Absorption Per Market (SF) Q4 '15 - Q1 '16
5,700,000
2,850,000
570,000
-570,000
-2,850,000
-5,700,000
4.5 billion
2.25 billion
450 million
Occupied SF
Vacant SF
SF By Region
N O R T H E A S T
S O U T H
M I D W E S T
W E S T
Absorption Per Market (SF) Q4 '15 - Q1 '16
5,700,000
2,850,000
570,000
-570,000
-2,850,000
-5,700,000
4.5 billion
2.25 billion
450 million
Occupied SF
Vacant SF
SF By Region
N O R T H E A S T
S O U T H
M I D W E S T
W E S T
Absorption Per Market (SF)q4 '15 - q1 '16
8,800,000
4,400,000
880,000
-880,000
-4,400,000
-8,800,000
4.5 billion
2.25 billion
450 million
Occupied SF
Vacant SF
SF By Region
Industrial Vacancy, Inventory & AbsorptionQ1 2016 | United States
How would you characterize current industrial rents in your market?
% of reporting marketsSource: Colliers International
7.9 7.7 7.5 7.2 7.0 6.7 6.6 6.4 6.3
Bill
ions
Rolling 4-Qtr Deal Volume Year over Year Change
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Holding Steady Expand Contract
Midwest
South
Northea
stWest U.S.
Excluding renewals, of the leases signed this quarter, did most tenants Expand, Hold Steady or Contract?
How would you characterize current industrial rents in your market?
Provide a three month forecast for vacancy levels (relative to current quarter):
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northea
stWest U.S.
Provide a three month forecast for rents (relative to current quarter):
U.S. OFFICE MARKET Q1 2014 - Q1 2016
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Q12014
Q2 Q3 Q4 Q12015
Q2 Q3 Q4 Q1 2016
Vac
ancy
%
Absorption MSF New Supply Vacancy (%)
0.0 5.0 10.0 15.0 20.0 25.0 Millions
ABSORPTION, UNDER CONSTRUCTION (SF) | SELECT MARKETS | Q1 2016
Under Construction Q1-16 Absorption
Houston, TX
New Jersey - Northern
Los Angeles, CA
Savannah, GA
New Jersey - Central
Atlanta, GA
Inland Empire, CA
Dallas-Ft. Worth, TX
Chicago, IL
Declining, 3.1%
No Clear Direction, 15.4%
Bottoming, 1.5%
Increasing, 63.1%Increasing, 63.1%
Peaking, 16.9%
-100%
-50%
0%
50%
100%
150%
200%
$-
$20
$40
$60
$80
$100
$120
07Q2
07Q4
08Q2
08Q4
09Q2
09Q4
10Q2
10Q4
11Q2
11Q4
12Q2
12Q4
13Q2
13Q4
14Q2
14Q4
15Q2
15Q4
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northea
stWest U.S.
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6% 3 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International
Vacancy
The U.S. vacancy rate declined 10 bps compared with the previous quarter and 70 bps compared with the previous year to 6.3% in Q1. The decline was broad-based with only 12 markets posting negative absorption.
The West region posted the lowest vacancy rate in Q1 of 4.6%, in large part to Los Angeles 1.4% vacancy rate, the lowest in the country. The Midwest region finished first quarter at 6.1%, 10 bps lower than the previous quarter. More than 2.1 MSF of mid-sized (under 300,000 square feet) modern bulk inventory absorbed in Indianapolis in Q1, lowering vacancy rates 60 bps to 7.4%, the largest decline in the region. Vacancy rates were stable in the South at 7.0%. Demand in Nashville is robust with vacancy rates descending 90 bps to 4.6% in Q1. The Northeast region posted a 30-bp quarter-over-quarter decline to 7.8% in Q1. Baltimore posted occupancy gains of 878,915 SF lowering its vacancy rate to 9.0%, a 70-bp decline compared with the previous quarter.
U.S. Industrial Market Q1 2014 to Q1 2016
Source: Colliers International
Industrial Transaction Volume Q1 2016 - United States
7.9 7.7 7.5 7.2 7.0 6.7 6.6 6.4 6.3
Billi
ons
Rolling 4-Qtr Deal Volume Year over Year Change
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Holding Steady Expand Contract
Midwest
South
Northea
stWest U.S.
Excluding renewals, of the leases signed this quarter, did most tenants Expand, Hold Steady or Contract?
How would you characterize current industrial rents in your market?
Provide a three month forecast for vacancy levels (relative to current quarter):
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northea
stWest U.S.
Provide a three month forecast for rents (relative to current quarter):
U.S. OFFICE MARKET Q1 2014 - Q1 2016
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Q12014
Q2 Q3 Q4 Q12015
Q2 Q3 Q4 Q1 2016
Vaca
ncy
%
Absorption MSF New Supply Vacancy (%)
0.0 5.0 10.0 15.0 20.0 25.0 Millions
ABSORPTION, UNDER CONSTRUCTION (SF) | SELECT MARKETS | Q1 2016
Under Construction Q1-16 Absorption
Houston, TX
New Jersey - Northern
Los Angeles, CA
Savannah, GA
New Jersey - Central
Atlanta, GA
Inland Empire, CA
Dallas-Ft. Worth, TX
Chicago, IL
Declining, 3.1%
No Clear Direction, 15.4%
Bottoming, 1.5%
Increasing, 63.1%Increasing, 63.1%
Peaking, 16.9%
-100%
-50%
0%
50%
100%
150%
200%
$-
$20
$40
$60
$80
$100
$120
07Q2
07Q4
08Q2
08Q4
09Q2
09Q4
10Q210Q4
11Q2
11Q4
12Q2
12Q4
13Q2
13Q4
14Q2
14Q4
15Q2
15Q4
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northea
stWest U.S.
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.9 7.7 7.5 7.2 7.0 6.7 6.6 6.4 6.3
Billi
ons
Rolling 4-Qtr Deal Volume Year over Year Change
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Holding Steady Expand Contract
Midwest
South
Northea
stWest U.S.
Excluding renewals, of the leases signed this quarter, did most tenants Expand, Hold Steady or Contract?
How would you characterize current industrial rents in your market?
Provide a three month forecast for vacancy levels (relative to current quarter):
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northea
stWest U.S.
Provide a three month forecast for rents (relative to current quarter):
U.S. OFFICE MARKET Q1 2014 - Q1 2016
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Q12014
Q2 Q3 Q4 Q12015
Q2 Q3 Q4 Q1 2016
Vaca
ncy
%
Absorption MSF New Supply Vacancy (%)
0.0 5.0 10.0 15.0 20.0 25.0 Millions
ABSORPTION, UNDER CONSTRUCTION (SF) | SELECT MARKETS | Q1 2016
Under Construction Q1-16 Absorption
Houston, TX
New Jersey - Northern
Los Angeles, CA
Savannah, GA
New Jersey - Central
Atlanta, GA
Inland Empire, CA
Dallas-Ft. Worth, TX
Chicago, IL
Declining, 3.1%
No Clear Direction, 15.4%
Bottoming, 1.5%
Increasing, 63.1%Increasing, 63.1%
Peaking, 16.9%
-100%
-50%
0%
50%
100%
150%
200%
$-
$20
$40
$60
$80
$100
$120
07Q2
07Q4
08Q2
08Q4
09Q2
09Q4
10Q210Q4
11Q2
11Q4
12Q2
12Q4
13Q2
13Q4
14Q2
14Q4
15Q2
15Q4
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northea
stWest U.S.
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
Source: Real Capital Analytics
Manufacturing at a Glance - April 2016
INDEXSERIES INDEX
(APR 2016)
SERIES INDEX
(MAR 2016)
PERCENTAGE-POINT
CHANGEDIRECTION RATE OF
CHANGETREND*
(MONTHS)
PMI® 50.8 51.8 -1.0 Growing Slower 2
New Orders 55.8 58.3 -2.5 Growing Slower 4
Production 54.2 55.3 -1.1 Growing Slower 4
Employment 49.2 48.1 1.1 Contracting Slower 5
Supplier Deliveries 49.1 50.2 -1.1 Faster From
Slower 1
Inventories 45.5 47.0 -1.5 Contracting Faster 10
Customers’ Inventories 46.0 49.0 -3 Too Low Faster 3
Prices 59.0 51.5 7.5 Increasing Faster 2
Backlog of Orders 50.5 51.0 -0.5 Growing Slower 2
Exports 52.5 52.0 0.5 Growing Faster 2
Imports 50.0 49.5 0.5 Unchanged From Contracting 1
OVERALL ECONOMY Growing Slower 83
Manufacturing Sector Growing Slower 2
*Number of months moving in current directionSource: ISM
Absorption, Under Construction (SF)Select U.S. Markets | Q1 2016
4 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International
Absorption
Net absorption remained strong in Q1 at over 63.8 MSF, 1.2% higher compared with the previous quarter. Chicago dominated Q1 absorption at 8.7 MSF, 13.8% of the U.S. total. Nine new leases over 200,000 SF were signed in Chicago, while 14 build-to-suit (BTS) completions totaling 3.3 MSF, were the main contributors to the robust occupancy gains. Other regional distribution hubs posted healthy occupancy gains including Dallas-Ft. Worth at 5.4 MSF, Inland Empire at 4.3 MSF and Atlanta and Philadelphia at 3.4 MSF each.
Ranked by absorption relative to inventory, East Coast port markets accounted for three of the top five markets in the U.S. Charleston led the way with Q1 absorption representing 2.7% of total inventory. Savannah finished 2nd with 1.9% of the total inventory being absorbed. Jacksonville finished 5th in the nation with occupancy gains of 1.5% of total inventory. All three markets look to take advantage of increased port activity in the coming quarters following the completion of the Panama Canal expansion.
Construction Activity
Rising demand for modern bulk distribution space pushed new supply to an all-time record of 60.1 MSF in Q1, breaking the previous record of 55.8 MSF in Q4 2007. 60.7% of new supply was speculative with developers confident that demand from consolidation and e-commerce will quickly absorb this inventory.
Construction is heavily concentrated in a handful of markets such as Atlanta, which led the nation with 7.3 MSF of new supply, 70.2% was speculative. This was the most new supply for a quarter in Atlanta in over a decade. Fourteen BTS completions elevated new supply in Chicago to 5.8 MSF in Q1. Despite the large amount of BTS completions, 43.1% of new supply was speculative. The Inland Empire, one of the first markets in the nation to develop speculative inventory post-recession, completed 5.2 MSF in Q1, 66.1% of it speculative. Bulk inventory dominates construction in each of these markets to quenching demand from occupiers looking for higher clear heights, larger truck courts, and other amenities necessary in modern logistics and e-commerce related functions.
7.9 7.7 7.5 7.2 7.0 6.7 6.6 6.4 6.3
Billi
ons
Rolling 4-Qtr Deal Volume Year over Year Change
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Holding Steady Expand Contract
Midwest
South
Northeas
tWest U.S.
Excluding renewals, of the leases signed this quarter, did most tenants Expand, Hold Steady or Contract?
How would you characterize current industrial rents in your market?
Provide a three month forecast for vacancy levels (relative to current quarter):
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northeas
tWest U.S.
Provide a three month forecast for rents (relative to current quarter):
U.S. OFFICE MARKET Q1 2014 - Q1 2016
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Q12014
Q2 Q3 Q4 Q12015
Q2 Q3 Q4 Q1 2016
Vaca
ncy
%
Absorption MSF New Supply Vacancy (%)
0.0 5.0 10.0 15.0 20.0 25.0 Millions
ABSORPTION, UNDER CONSTRUCTION (SF) | SELECT MARKETS | Q1 2016
Under Construction Q1-16 Absorption
Houston, TX
New Jersey - Northern
Los Angeles, CA
Savannah, GA
New Jersey - Central
Atlanta, GA
Inland Empire, CA
Dallas-Ft. Worth, TX
Chicago, IL
Declining, 3.1%
No Clear Direction, 15.4%
Bottoming, 1.5%
Increasing, 63.1%Increasing, 63.1%
Peaking, 16.9%
-100%
-50%
0%
50%
100%
150%
200%
$-
$20
$40
$60
$80
$100
$120
07Q2
07Q4
08Q208Q4
09Q2
09Q4
10Q210Q4
11Q2
11Q4
12Q212Q4
13Q2
13Q4
14Q214Q4
15Q2
15Q4
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northeas
tWest U.S.
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.9 7.7 7.5 7.2 7.0 6.7 6.6 6.4 6.3
Billi
ons
Rolling 4-Qtr Deal Volume Year over Year Change
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Holding Steady Expand Contract
Midwest
South
Northeas
tWest U.S.
Excluding renewals, of the leases signed this quarter, did most tenants Expand, Hold Steady or Contract?
How would you characterize current industrial rents in your market?
Provide a three month forecast for vacancy levels (relative to current quarter):
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northeas
tWest U.S.
Provide a three month forecast for rents (relative to current quarter):
U.S. OFFICE MARKET Q1 2014 - Q1 2016
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Q12014
Q2 Q3 Q4 Q12015
Q2 Q3 Q4 Q1 2016
Vaca
ncy
%
Absorption MSF New Supply Vacancy (%)
0.0 5.0 10.0 15.0 20.0 25.0 Millions
ABSORPTION, UNDER CONSTRUCTION (SF) | SELECT MARKETS | Q1 2016
Under Construction Q1-16 Absorption
Houston, TX
New Jersey - Northern
Los Angeles, CA
Savannah, GA
New Jersey - Central
Atlanta, GA
Inland Empire, CA
Dallas-Ft. Worth, TX
Chicago, IL
Declining, 3.1%
No Clear Direction, 15.4%
Bottoming, 1.5%
Increasing, 63.1%Increasing, 63.1%
Peaking, 16.9%
-100%
-50%
0%
50%
100%
150%
200%
$-
$20
$40
$60
$80
$100
$120
07Q2
07Q4
08Q208Q4
09Q2
09Q4
10Q210Q4
11Q2
11Q4
12Q212Q4
13Q2
13Q4
14Q214Q4
15Q2
15Q4
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northeas
tWest U.S.
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.9 7.7 7.5 7.2 7.0 6.7 6.6 6.4 6.3
Billi
ons
Rolling 4-Qtr Deal Volume Year over Year Change
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Holding Steady Expand Contract
Midwest
South
Northeas
tWest U.S.
Excluding renewals, of the leases signed this quarter, did most tenants Expand, Hold Steady or Contract?
How would you characterize current industrial rents in your market?
Provide a three month forecast for vacancy levels (relative to current quarter):
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northeas
tWest U.S.
Provide a three month forecast for rents (relative to current quarter):
U.S. OFFICE MARKET Q1 2014 - Q1 2016
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Q12014
Q2 Q3 Q4 Q12015
Q2 Q3 Q4 Q1 2016
Vaca
ncy
%
Absorption MSF New Supply Vacancy (%)
0.0 5.0 10.0 15.0 20.0 25.0 Millions
ABSORPTION, UNDER CONSTRUCTION (SF) | SELECT MARKETS | Q1 2016
Under Construction Q1-16 Absorption
Houston, TX
New Jersey - Northern
Los Angeles, CA
Savannah, GA
New Jersey - Central
Atlanta, GA
Inland Empire, CA
Dallas-Ft. Worth, TX
Chicago, IL
Declining, 3.1%
No Clear Direction, 15.4%
Bottoming, 1.5%
Increasing, 63.1%Increasing, 63.1%
Peaking, 16.9%
-100%
-50%
0%
50%
100%
150%
200%
$-
$20
$40
$60
$80
$100
$120
07Q2
07Q4
08Q208Q4
09Q2
09Q4
10Q210Q4
11Q2
11Q4
12Q212Q4
13Q2
13Q4
14Q214Q4
15Q2
15Q4
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northeas
tWest U.S.
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.9 7.7 7.5 7.2 7.0 6.7 6.6 6.4 6.3
Billio
ns
Rolling 4-Qtr Deal Volume Year over Year Change
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Holding Steady Expand Contract
Midwest
South
Northeas
tWest U.S.
Excluding renewals, of the leases signed this quarter, did most tenants Expand, Hold Steady or Contract?
How would you characterize current industrial rents in your market?
Provide a three month forecast for vacancy levels (relative to current quarter):
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northeas
tWest U.S.
Provide a three month forecast for rents (relative to current quarter):
U.S. OFFICE MARKET Q1 2014 - Q1 2016
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Q12014
Q2 Q3 Q4 Q12015
Q2 Q3 Q4 Q1 2016
Vaca
ncy
%
Absorption MSF New Supply Vacancy (%)
0.0 5.0 10.0 15.0 20.0 25.0 Millions
ABSORPTION, UNDER CONSTRUCTION (SF) | SELECT MARKETS | Q1 2016
Under Construction Q1-16 Absorption
Houston, TX
New Jersey - Northern
Los Angeles, CA
Savannah, GA
New Jersey - Central
Atlanta, GA
Inland Empire, CA
Dallas-Ft. Worth, TX
Chicago, IL
Declining, 3.1%
No Clear Direction, 15.4%
Bottoming, 1.5%
Increasing, 63.1%Increasing, 63.1%
Peaking, 16.9%
-100%
-50%
0%
50%
100%
150%
200%
$-
$20
$40
$60
$80
$100
$120
07Q2
07Q4
08Q208Q4
09Q209Q4
10Q210Q4
11Q2
11Q4
12Q212Q4
13Q213Q4
14Q214Q4
15Q215Q4
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northeas
tWest U.S.
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.9 7.7 7.5 7.2 7.0 6.7 6.6 6.4 6.3
Billi
ons
Rolling 4-Qtr Deal Volume Year over Year Change
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Holding Steady Expand Contract
Midwest
South
Northeas
tWest U.S.
Excluding renewals, of the leases signed this quarter, did most tenants Expand, Hold Steady or Contract?
How would you characterize current industrial rents in your market?
Provide a three month forecast for vacancy levels (relative to current quarter):
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northeas
tWest U.S.
Provide a three month forecast for rents (relative to current quarter):
U.S. OFFICE MARKET Q1 2014 - Q1 2016
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Q12014
Q2 Q3 Q4 Q12015
Q2 Q3 Q4 Q1 2016
Vaca
ncy
%
Absorption MSF New Supply Vacancy (%)
0.0 5.0 10.0 15.0 20.0 25.0 Millions
ABSORPTION, UNDER CONSTRUCTION (SF) | SELECT MARKETS | Q1 2016
Under Construction Q1-16 Absorption
Houston, TX
New Jersey - Northern
Los Angeles, CA
Savannah, GA
New Jersey - Central
Atlanta, GA
Inland Empire, CA
Dallas-Ft. Worth, TX
Chicago, IL
Declining, 3.1%
No Clear Direction, 15.4%
Bottoming, 1.5%
Increasing, 63.1%Increasing, 63.1%
Peaking, 16.9%
-100%
-50%
0%
50%
100%
150%
200%
$-
$20
$40
$60
$80
$100
$120
07Q2
07Q4
08Q208Q4
09Q2
09Q4
10Q210Q4
11Q2
11Q4
12Q212Q4
13Q2
13Q4
14Q214Q4
15Q2
15Q4
0%
10%
20%
30%
40%
50%
60%
80%
70%
90%
100%
Up Same Down
Midwest
South
Northeas
tWest U.S.
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
8.7% 23.1% 17.4% 13.2%
22.2%
30.4%
53.8%
47.8% 39.7%
77.8% 60.9%
23.1% 34.8%
47.1%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
5.0% 1.6%
77.8% 65.0%
53.8% 54.5% 60.9%
22.2% 30.0%
46.2% 45.5% 37.5%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
7.7% 10.0% 4.5% 4.6%
46.2% 40.0% 65.0% 45.5% 50.8%
46.2% 50.0% 35.0%
50.0% 44.6%
Excluding renewals of the leases signed this quarter, did most tenants expand, hold steady or contract?
Provide a three month forecast for rents (relative to current quarter):
Source: Colliers International
Provide a three month forecast for vacancy levels (relative to current quarter):
% of reporting marketsSource: Colliers International
5 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International
Land constraints in certain markets, combined with concern for over building, reduced the amount of space under construction to 185.5 MSF in Q1, a 3.3% decline compared with the previous quarter. Over half was speculative. Dallas-Ft. Worth development is booming with 20.0 MSF under construction, 18.2 MSF was speculative. Buildings under construction in Dallas-Ft. Worth were 34.0% pre-leased at the end of Q1, up from 20.0% pre-leased at year-end 2015.
Investment Activity
U.S. investment transaction volume finished Q1 at $12.6 billion according to Real Capital Analytics (RCA), a 38% decline from the first quarter last year. The lack of quality industrial space for sale combined with a very strong Q1 15 created a significant percentage drop.
Investment activity was healthy in secondary markets in Q1 including Boston (7.0%) which led the nation with 51 properties trading for $881 million, and East Bay (6.1%) with 31 properties trading hands for $768 million. Los Angeles posted another strong quarter of investment activity at $848 million, representing 6.7% of the total sales volume in Q1.
Cap rates increased in Q1 to 6.9%, 30 bps higher than the previous quarter. The increase in cap rates is a direct result of a higher percentage of class B and C buildings selling in Q1. Despite an uptick in cap rates, according to RCA, industrial remains competitive in today’s low yield environment with other product types nationwide including office at 6.6%, retail at 6.6%, apartments at 5.7% and hotels at 8.4%.
Conclusion
Demand drivers for industrial real estate are sound. While the economy faces significant headwinds including weakened domestic manufacturing and decreased worldwide trade, U.S. imports should increase with solid job growth and improved consumer demand. We expect the need for new, modern industrial space will be robust, keeping absorption positive for the foreseeable future. Rent growth should drive investment activity with foreign capital and U.S. institutional investors competing for the limited amount of inventory available to purchase.
United States Industrial Overview | Q1 2016UNITED STATES WEST MIDWEST SOUTH NORTHEAST
Number of Markets 71 23 13 24 11
Inventory (Million SF) 15,193.8 3,937.5 4,226.6 4,691.2 2,338.5
% of U.S. Inventory 100.0% 25.9% 27.8% 30.9% 15.4%
Q1-16 New Supply (Million SF) 60.1 14.5 13.5 25.0 7.1
% of U.S. New Supply 100.0% 24.2% 22.5% 41.6% 11.8%
Vacancy (%) 6.3% 4.6% 6.1% 7.0% 7.8%
Q1-16 Absorption (Million SF) 31.3 7.0 9.8 11.2 3.3
Sources: Real Capital Analytics, Colliers International
Top 5 MSAs in Transaction Volume Q1 2016
1. Boston $886 million
2. Los Angeles $848 million
3. East Bay $768 million
4. Chicago $542 million
5. Inland Empire $487 million
Source: Colliers International
Industrial Real Estate Indicators U.S.
GDP + 0.5% in Q1
Inventory 15.2 BSF
Vacancy 6.3% Nationwide (down 10 bps)
Net Absorption 63.9 MSF in Q1
New Supply 60.1 MSF in Q1, most on record
New Supply to Inventory 0.40% in Q1 most since 0.47% in Q4 2007
Asking Rental Rates (psf) $5.52 psf, highest since Q3 2008
- Top 10 Markets account for 55.9% of 63.9 MSF net absorption in Q1.
Source: Colliers International
Top 5 MSAs in Net Absorption Q1 2016
1. Dallas-Ft. Worth 8.8 MSF
2. Inland Empire 5.4 MSF
3. Atlanta 4.4 MSF
4. Philadelphia 3.4 MSF
5. Chicago 3.4 MSF
6 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International
United States | Industrial Survey | Inventory, New Supply, Under Construction
MARKET INVENTORY (SF) MAR 31, 2016
SPECULATIVE NEW SUPPLY Q1 2016 (SF)
TOTAL NEW SUPPLY Q1 2016
SPECULATIVE CURRENTLY UNDER CONSTRUCTION (SF)
TOTAL CURRENTLY UNDER CONSTRUCTION (SF)
NORTHEAST
Baltimore, MD 237,650,486 151,878 415,378 59,400 943,716
Boston, MA**** 171,329,699 0 386,000 0 1,061,855
Hartford, CT 95,613,351 0 0 0 0
Long Island, NY 156,768,033 0 0 491,912 491,912
New Hampshire 61,542,042 98,484 98,484 0 0
New Jersey - Central 317,340,170 1,542,313 1,542,313 1,815,852 1,815,852
New Jersey - Northern 363,881,051 40,000 355,000 2,128,331 2,397,586
Philadelphia, PA 427,680,568 1,825,691 2,073,143 5,669,630 9,547,206
Pittsburgh, PA 178,316,374 0 98,791 833,524 1,089,629
Shenandoah Valley, MD-VA-WV 101,386,736 24,800 72,800 430,050 1,960,323
Washington, D.C. 227,027,165 376,040 2,020,895 746,866 3,142,655
Northeast Total 2,338,535,675 4,059,206 7,062,804 12,175,565 22,450,734
SOUTH
Atlanta, GA 640,715,663 5,126,084 7,306,012 7,424,824 12,796,701
Austin, TX 68,222,333 151,278 174,870 72,000 72,000
Birmingham, AL 107,102,000 0 0 0 120,000
Charleston, SC 35,288,763 752,000 1,409,000 142,000 142,000
Charlotte, NC 344,201,366 438,500 3,359,463
Columbia, SC 86,543,247 0 0 0 765,191
Dallas-Ft. Worth, TX 770,081,212 3,489,986 4,181,913 18,220,526 20,014,871
Ft. Lauderdale-Broward, FL 111,692,981 212,291 212,291 799,639 799,639
Greenville/Spartanburg, SC 189,650,188 632,420 1,156,820 1,290,638 5,155,638
Houston, TX 519,561,628 2,589,279 3,239,279 2,907,262 12,261,923
Huntsville, AL 54,890,549 0 0 0 0
Jacksonville, FL 124,883,737 237,319 747,752 0 98,877
Louisville, KY 188,810,800 1,192,626 2,226,000
Memphis, TN 231,835,204 1,373,316 1,858,513 0 1,527,500
Miami, FL 215,849,162 401,317 401,317 2,405,232 2,405,232
Nashville, TN 191,083,708 51,800 51,800 1,300,000 3,275,000
Norfolk, VA 101,392,341 0 0 55,000 55,000
Orlando, FL 136,214,769 0 301,384 0 276,048
Raleigh, NC 113,267,104 311,943 728,273
Richmond, VA 113,812,828 340,000 21,000 21,000
Savannah, GA 47,480,950 387,000 1,017,000 1,057,000 2,157,000
Tampa Bay, FL 201,912,721 401,670 401,670 4,150,596 4,150,596
West Palm Beach, FL 51,456,862 235,445 235,445 531,118 531,118
South Total 4,691,226,026 16,041,205 24,978,135 40,376,835 72,939,070
**** Q4-15 data displayedThe detail for markets with older data is removed, but numbers remain in totals and subtotals.
7 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International7
United States | Industrial Survey | Inventory, New Supply, Under Construction
MARKET INVENTORY (SF) MAR 31, 2016
SPECULATIVE NEW SUPPLY Q1 2016 (SF)
TOTAL NEW SUPPLY Q1 2016
SPECULATIVE CURRENTLY UNDER CONSTRUCTION (SF)
TOTAL CURRENTLY UNDER CONSTRUCTION (SF)
MIDWEST
Chicago, IL 1,338,800,146 2,507,274 5,815,473 5,749,836 11,476,764
Cincinnati, OH 249,464,611 0 0 3,296,507 4,837,987
Cleveland, OH 395,161,963 127,000 1,123,200 714,188 1,570,988
Columbus, OH 226,757,195 482,300 1,069,784 1,167,254 3,940,254
Dayton, OH 104,287,094 0 140,000 60,000 506,000
Detroit, MI 534,220,490 461,807 1,802,681
Indianapolis, IN 233,495,171 432,631 993,293 1,279,712 2,301,436
Kansas City, MO-KS 241,686,086 1,098,908 1,098,908 5,721,562 6,291,562
Milwaukee, WI 249,247,038 1,033,533 1,033,533 302,000 392,000
Minneapolis/St. Paul, MN 244,298,078 469,468 1,324,468 709,056 2,291,906
Omaha, NE 68,684,560 265,300 265,300 369,644 562,644
St. Louis, MO 226,219,339 0 0 2,002,153 3,514,153
Midwest Total 4,226,555,846 6,416,414 13,519,886 21,446,912 39,834,375
WEST
Albuquerque, NM**** 37,386,940 0 0 0 0
Bakersfield, CA 37,675,102 0 65,413 139,920 359,520
Boise, ID**** 46,373,012 0 0 0 12,000
Denver, CO 221,212,606 120,785 120,785 1,044,995 4,838,062
Fairfield, CA 49,586,980 774,758 774,758 146,013 238,271
Fresno, CA 68,289,425 180,729 180,729 0 0
Honolulu, HI 39,767,808 0 0 0 0
Las Vegas, NV 121,719,635 832,535 1,104,060 1,446,539 1,446,539
Los Angeles - Inland Empire, CA 467,509,200 3,416,100 5,166,100 14,608,000 16,187,000
Los Angeles, CA 895,073,600 760,600 760,600 2,914,200 2,914,200
Oakland, CA 143,409,822 0 0 637,938 637,938
Orange County, CA 181,251,300 508,300 508,300 676,000 676,000
Phoenix, AZ 290,765,974 1,176,855 2,023,079 1,625,232 2,884,906
Pleasanton/Tri-Valley, CA 17,370,791 0 0 1,298,207 1,298,207
Portland, OR 198,247,454 0 307,532 0 2,106,001
Reno, NV 88,307,974 277,000 8,706,774
Sacramento, CA 164,392,401 96,152 0 0
San Diego, CA 188,527,333 0 306,054 927,609 1,831,268
San Francisco Peninsula, CA 39,500,680 0 0 0 0
San Jose - Silicon Valley, CA 254,499,838 0 302,400 1,466,981 1,616,981
Seattle/Puget Sound, WA 268,194,901 788,915 788,915 3,000,000 3,000,000
Stockton/San Joaquin County, CA 100,743,196 745,640 1,745,640 517,250 1,541,803
Walnut Creek, CA 17,703,948 0 0 15,240 15,240
West Total 3,937,509,920 9,305,217 14,527,517 30,464,124 50,310,710
U.S. TOTALS 15,193,827,467 35,822,042 60,088,342 104,463,436 185,534,889
(continued)
**** Q4-15 data displayedThe detail for markets with older data is removed, but numbers remain in totals and subtotals.
8 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International
United States | Industrial Survey | Absorption, Vacancy
MARKET ABSORPTION Q1 2016 (SF)
VACANCY RATE DEC 31, 2015
VACANCY RATE MAR 31, 2016
CHANGE IN VACANCY
NORTHEAST
Baltimore, MD 1,970,464 9.7% 9.0% -0.7%
Boston, MA**** -1,331,254 17.8% 18.6% 0.8%
Hartford, CT 380,650 7.2% 6.8% -0.4%
Long Island, NY 80,815 3.6% 3.6% -0.1%
New Hampshire 584,433 8.2% 7.2% -0.9%
New Jersey - Central 2,070,168 5.7% 5.2% -0.5%
New Jersey - Northern 1,344,013 6.6% 6.3% -0.3%
Philadelphia, PA 3,428,338 8.1% 7.7% -0.4%
Pittsburgh, PA 795,004 6.6% 6.2% -0.4%
Shenandoah Valley, MD-VA-WV 725,295 8.9% 8.3% -0.6%
Washington, D.C. 1,523,404 9.2% 9.3% 0.0%
Northeast Total 11,571,330 8.1% 7.8% -0.3%
SOUTH
Atlanta, GA 3,449,400 7.7% 8.2% 0.5%
Austin, TX 108,264 5.8% 5.9% 0.1%
Birmingham, AL 73,646 9.5% 9.4% -0.1%
Charleston, SC 958,756 5.8% 6.9% 1.0%
Charlotte, NC -146,604 8.6% 8.7% 0.2%
Columbia, SC 307,457 8.7% 8.3% -0.4%
Dallas-Ft. Worth, TX 5,389,157 7.2% 7.0% -0.2%
Ft. Lauderdale-Broward, FL 189,614 6.5% 6.5% -0.1%
Greenville/Spartanburg, SC 1,026,802 7.6% 7.6% 0.0%
Houston, TX 1,324,641 5.1% 5.4% 0.3%
Huntsville, AL 453,139 6.7% 5.8% -0.8%
Jacksonville, FL 1,838,090 7.0% 6.1% -0.9%
Louisville, KY 1,300,038 5.2% 5.2% -0.1%
Memphis, TN 1,685,125 9.3% 9.2% -0.1%
Miami, FL 501,253 4.8% 4.7% -0.1%
Nashville, TN 1,830,505 5.5% 4.6% -0.9%
Norfolk, VA -267,999 7.0% 7.2% 0.3%
Orlando, FL 730,333 7.6% 7.3% -0.3%
Raleigh, NC 110,362 6.6% 6.8% 0.1%
Richmond, VA 569,191 8.4% 8.2% -0.2%
Savannah, GA 900,750 3.0% 3.2% 0.2%
Tampa Bay, FL 719,918 7.6% 7.4% -0.2%
West Palm Beach, FL 274,602 5.1% 5.0% -0.1%
South Total 23,719,601 7.0% 7.0% 0.0%
**** Q4-15 data displayedThe detail for markets with older data is removed, but numbers remain in totals and subtotals.
9 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International9
United States | Industrial Survey | Absorption, Vacancy
MARKET ABSORPTION Q1 2016 (SF)
VACANCY RATE DEC 31, 2015
VACANCY RATE MAR 31, 2016
CHANGE IN VACANCY
MIDWEST
Chicago, IL 8,783,243 7.3% 7.1% -0.3%
Cincinnati, OH 533,256 5.1% 4.9% -0.2%
Cleveland, OH 355,949 5.4% 5.6% 0.2%
Columbus, OH 1,445,902 6.4% 6.1% -0.3%
Dayton, OH 454,905 7.5% 7.2% -0.4%
Detroit, MI 2,156,550 4.8% 4.4% -0.4%
Indianapolis, IN 2,282,214 8.0% 7.4% -0.6%
Kansas City, MO-KS 406,144 6.1% 6.4% 0.3%
Milwaukee, WI 722,973 4.2% 4.3% 0.1%
Minneapolis/St. Paul, MN 631,389 6.4% 6.5% 0.1%
Omaha, NE -21,117 2.7% 3.3% 0.5%
St. Louis, MO -92,560 6.9% 6.9% 0.0%
Midwest Total 17,768,886 6.2% 6.1% -0.2%
WEST
Albuquerque, NM**** 95,336 6.7% 6.4% -0.3%
Bakersfield, CA 524,637 4.7% 3.6% -1.2%
Boise, ID**** -261,610 3.8% 3.8% 0.0%
Denver, CO 254,183 4.1% 4.1% -0.1%
Fairfield, CA -12,000 5.0% 6.5% 1.6%
Fresno, CA 343,519 5.4% 5.1% -0.3%
Honolulu, HI 67,682 1.7% 1.5% -0.2%
Las Vegas, NV 630,108 5.6% 5.9% 0.3%
Los Angeles - Inland Empire, CA 4,347,400 4.3% 4.5% 0.1%
Los Angeles, CA 765,900 1.5% 1.4% -0.1%
Oakland, CA 396,354 2.4% 2.1% -0.3%
Orange County, CA 361,000 3.2% 3.0% -0.2%
Phoenix, AZ 1,633,654 10.9% 11.0% 0.1%
Pleasanton/Tri-Valley, CA 320,324 4.4% 2.5% -2.0%
Portland, OR 430,263 5.1% 5.1% -0.1%
Reno, NV -33,533 8.8% 9.1% 0.3%
Sacramento, CA 545,910 10.4% 10.1% -0.3%
San Diego, CA 13,247 4.9% 5.0% 0.1%
San Francisco Peninsula, CA -144,878 2.5% 2.7% 0.3%
San Jose - Silicon Valley, CA -674,544 5.0% 5.2% 0.2%
Seattle/Puget Sound, WA -110,305 3.7% 4.1% 0.3%
Stockton/San Joaquin County, CA 1,533,195 8.0% 8.0% 0.0%
Walnut Creek, CA -228,756 7.7% 8.9% 1.3%
West Total 10,797,086 4.6% 4.6% 0.0%
U.S. TOTALS 63,856,903 6.4% 6.3% -0.1%
(continued)
**** Q4-15 data displayedThe detail for markets with older data is removed, but numbers remain in totals and subtotals.
10 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International
United States | Industrial Survey | 3-Month Forecasts, Sales Price, Cap Rates
MARKET VACANCY FORECAST (3 MONTHS)**
RENT FORECAST (3 MONTHS)**
ABSORPTION FORECAST (3 MONTHS)**
AVERAGE SALES PRICE (USD/SF) AVERAGE CAP RATE
NORTHEAST
Baltimore, MD Down Up Positive $116 8.1%
Boston, MA**** N/A N/A N/A $77 7.3%
Hartford, CT Same Same Positive $38 8.5%
Long Island, NY Down Up Positive $98 8.1%
New Hampshire N/A N/A Positive
New Jersey - Central Down Up Positive
New Jersey - Northern Down Up Positive $140 4.8%
Philadelphia, PA Down Up Positive $81 6.5%
Pittsburgh, PA Same Up Positive $55 7.8%
Shenandoah Valley, MD-VA-WV Down Up Positive $74 6.8%
Washington, D.C. Down Same Positive $122 7.0%
Northeast Average* $89 7.2%
SOUTH
Atlanta, GA Same Up Positive $49 7.6%
Austin, TX Same Up Positive $98 6.1%
Birmingham, AL Same Same Close to zero
Charleston, SC Down Same Positive $39
Charlotte, NC Down N/A Positive
Columbia, SC Down Up Positive $31
Dallas-Ft. Worth, TX Same Same Positive $45 7.4%
Ft. Lauderdale-Broward, FL Down Up Positive $78 7.8%
Greenville/Spartanburg, SC Down Up Positive $47 6.6%
Houston, TX Up Down Positive $66 8.3%
Huntsville, AL Same Same Close to zero
Jacksonville, FL Down Up Positive $35 9.0%
Louisville, KY Up N/A Positive
Memphis, TN Same Up Positive $36 7.3%
Miami, FL Down Up Positive $83 7.3%
Nashville, TN Down Up Positive $53 7.3%
Norfolk, VA Down Same Positive $55 8.5%
Orlando, FL Down Up Positive $64 7.5%
Raleigh, NC Down N/A Positive
Richmond, VA N/A N/A N/A
Savannah, GA Down Up Positive $44 7.0%
Tampa Bay, FL Down Up Positive $70 8.0%
West Palm Beach, FL Down Up Positive $84 8.0%
South Average* $58 7.7%
* Straight averages used** Forecasts for warehouse space**** Q4-15 data displayedThe detail for markets with older data is removed, but numbers remain in totals and subtotals.
11 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International11
United States | Industrial Survey | 3-Month Forecasts, Sales Price, Cap Rates
MARKET VACANCY FORECAST (3 MONTHS)**
RENT FORECAST (3 MONTHS)**
ABSORPTION FORECAST (3 MONTHS)**
AVERAGE SALES PRICE (USD/SF) AVERAGE CAP RATE
MIDWEST
Chicago, IL Same Up Positive $68 5.2%
Cincinnati, OH Up Up Positive $46 8.0%
Cleveland, OH Down Up Positive $49 8.0%
Columbus, OH Same Up Positive $34 6.8%
Dayton, OH Same Same Close to zero $30
Detroit, MI Down Same Positive $33 7.0%
Indianapolis, IN Down Up Positive $43 6.3%
Kansas City, MO-KS Up Up Positive $75 7.6%
Milwaukee, WI Same Same Positive $55 7.8%
Minneapolis/St. Paul, MN Same Same Positive $35
Omaha, NE Same Up Positive
St. Louis, MO Up Same Close to zero $45 7.0%
Midwest Average* $47 7.1%
WEST
Albuquerque, NM**** Same Same Close to zero $88 7.5%
Bakersfield, CA Same Same Positive $42 10.0%
Boise, ID**** Down Up Positive $179 7.5%
Denver, CO Up Up Positive $89 7.4%
Fairfield, CA Same Up Close to zero $97 6.2%
Fresno, CA Same Same Positive $44 7.3%
Honolulu, HI Down Up Positive
Las Vegas, NV Up Same Negative
Los Angeles - Inland Empire, CA Same Up Positive $89 6.5%
Los Angeles, CA Same Up Close to zero $125 5.5%
Oakland, CA Same Up Positive $152 5.3%
Orange County, CA Same Same Close to zero $120 5.8%
Phoenix, AZ Down Up Positive $80 7.0%
Pleasanton/Tri-Valley, CA Up Same Negative
Portland, OR Down Up Positive $100 5.4%
Reno, NV Up N/A Positive
Sacramento, CA Down Same Positive $71 7.1%
San Diego, CA Down Up Positive $127 5.0%
San Francisco Peninsula, CA Same Same Close to zero $325 4.7%
San Jose - Silicon Valley, CA Same Same Close to zero $209 6.6%
Seattle/Puget Sound, WA Same Up Positive $146 6.3%
Stockton/San Joaquin County, CA Down Up Positive
Walnut Creek, CA Down Same Positive
West Average* $122 6.5%
U.S. AVERAGE* $81 7.1%
(continued)
* Straight averages used** Forecasts for warehouse space**** Q4-15 data displayedThe detail for markets with older data is removed, but numbers remain in totals and subtotals.
12 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International
United States | Industrial Survey | Average Asking NNN Rents as of March 2016
MARKETWAREHOUSE /
DISTRIBUTION SPACE (USD/SF/YR)
BULK SPACE (USD/SF/YR)
FLEX / SERVICE SPACE (USD/SF/YR)
TECH / R&D SPACE (USD/SF/YR)
NORTHEAST
Baltimore, MD $5.23 $4.94 $9.65 $16.66
Boston, MA**** $6.39 $5.96 $7.34 $16.36
Hartford, CT $3.90 $5.88 $7.87 $6.50
Long Island, NY $10.00 $10.00 $7.83
New Hampshire $5.83 $6.13 $9.45
New Jersey - Central $5.19 $4.82 $11.38
New Jersey - Northern $6.40 $6.30 $10.22
Philadelphia, PA $4.85 $4.95 $7.75 $11.25
Pittsburgh, PA $5.74 $5.51 $11.75 $11.75
Shenandoah Valley, MD-VA-WV $3.72 $3.31 $8.35 $5.12
Washington, D.C. $7.85 $7.16 $12.20 $13.12
Northeast Average* $5.92 $5.88 $9.13 $11.28
SOUTH
Atlanta, GA $3.63 $3.46 $8.28 $11.46
Austin, TX $9.23 $6.14 $11.10 $8.27
Birmingham, AL $4.36 $3.72 $8.75
Charleston, SC $4.71 $4.82 $11.82
Charlotte, NC $3.89 $3.99 $8.54
Columbia, SC $3.06 $3.41 $7.35
Dallas-Ft. Worth, TX $3.55 $2.90 $7.70 $9.05
Ft. Lauderdale-Broward, FL $8.00 $7.18 $11.50 $7.55
Greenville/Spartanburg, SC $3.76 $3.58 $7.52
Houston, TX $6.38 $4.93 $12.27 $12.78
Huntsville, AL $7.06 $4.52 $7.47
Jacksonville, FL $3.50 $4.05 $9.46
Louisville, KY $3.75 $3.70 $8.54
Memphis, TN $2.69 $2.81 $5.29 $9.75
Miami, FL $10.13 $7.44 $17.36 $8.60
Nashville, TN $4.50 $4.04 $8.76 $8.11
Norfolk, VA $4.73 $4.46 $8.41 $11.74
Orlando, FL $5.33 $5.04 $9.36 $13.23
Raleigh, NC $4.54 $4.72 $12.42
Richmond, VA $4.02 $4.08 $8.37 $10.54
Savannah, GA $3.95 $3.80 $7.00 $10.00
Tampa Bay, FL $4.59 $4.45 $8.38 $4.59
West Palm Beach, FL $9.09 $6.66 $12.95 $8.05
South Average* $5.09 $4.46 $9.38 $9.55
* Straight averages used** Forecasts for warehouse space**** Q4-15 data displayedThe detail for markets with older data is removed, but numbers remain in totals and subtotals.
13 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International13
United States | Industrial Survey | Average Asking NNN Rents as of March 2016
MARKETWAREHOUSE /
DISTRIBUTION SPACE (USD/SF/YR)
BULK SPACE (USD/SF/YR)
FLEX / SERVICE SPACE (USD/SF/YR)
TECH / R&D SPACE (USD/SF/YR)
MIDWEST
Chicago, IL $4.73 $4.47 $9.50
Cincinnati, OH $3.46 $3.33 $6.54 $6.54
Cleveland, OH $3.76 $3.76 $7.09 $7.09
Columbus, OH $3.00 $3.00 $6.05 $6.05
Dayton, OH $2.75 $2.99 $4.68 $4.68
Detroit, MI $4.60 $3.87 $8.22 $8.22
Indianapolis, IN $3.41 $6.09
Kansas City, MO-KS $4.48 $4.05 $8.26 $7.56
Milwaukee, WI $4.85 $3.75 $5.50
Minneapolis/St. Paul, MN $5.05 $4.81 $7.08 $7.54
Omaha, NE $4.53 $4.41 $6.68 $5.94
St. Louis, MO $3.79 $3.81 $6.94 $3.98
Midwest Average* $3.94 $3.76 $6.72 $6.23
WEST
Albuquerque, NM**** $5.10 $4.29 $9.24 $9.24
Bakersfield, CA $4.00 $3.40 $8.40
Boise, ID**** $5.16 $5.40 $6.84 $6.36
Denver, CO $6.47 $5.64 $9.91 $11.17
Fairfield, CA $5.71 $5.67 $6.34 $9.13
Fresno, CA $4.42 $3.65 $8.98 $8.98
Honolulu, HI $14.07
Las Vegas, NV $6.36 $6.15 $8.28 $11.28
Los Angeles - Inland Empire, CA $5.76 $5.10 $7.35 $7.99
Los Angeles, CA $7.68 $5.97 $10.01 $13.13
Oakland, CA $7.32 $7.44 $8.52 $17.04
Orange County, CA $8.28 $7.66 $14.65 $11.25
Phoenix, AZ $6.20 $4.93 $12.29 $12.53
Pleasanton/Tri-Valley, CA $6.12 $6.12
Portland, OR $5.70 $5.13 $11.40 $10.15
Reno, NV $4.23 $3.88 $7.81
Sacramento, CA $5.16 $3.48 $8.88 $8.04
San Diego, CA $9.24 $7.92 $13.08 $18.84
San Francisco Peninsula, CA $12.24 $11.40 $32.52 $32.52
San Jose - Silicon Valley, CA $8.69 $6.83 $13.34 $22.15
Seattle/Puget Sound, WA $6.68 $6.42 $13.98 $15.59
Stockton/San Joaquin County, CA $4.56 $4.68 $6.84 $5.88
Walnut Creek, CA $4.44 $9.60 $13.80
West Average* $6.68 $5.77 $10.87 $12.90
U.S. TOTALS $5.52 $4.96 $9.29 $10.42
(continued)
* Straight averages used** Forecasts for warehouse space**** Q4-15 data displayedThe detail for markets with older data is removed, but numbers remain in totals and subtotals.
14 United States Research Report | Q1 2016 | Industrial Market Outlook | Colliers International
MARKET VACANCY RATE MAR 31, 2016
Los Angeles, CA 1.4%
Honolulu, HI 1.5%
Oakland, CA 2.1%
Pleasanton/Tri-Valley, CA 2.5%
San Francisco Peninsula, CA 2.7%
Orange County, CA 3.0%
Savannah, GA 3.2%
Omaha, NE 3.3%
Long Island, NY 3.6%
Bakersfield, CA 3.6%
Boise, ID**** 3.8%
Denver, CO 4.1%
Seattle/Puget Sound, WA 4.1%
Milwaukee, WI 4.3%
Detroit, MI 4.4%
Los Angeles - Inland Empire, CA 4.5%
Nashville, TN 4.6%
Miami, FL 4.7%
Cincinnati, OH 4.9%
San Diego, CA 5.0%
West Palm Beach, FL 5.0%
Portland, OR 5.1%
Detroit, MI 5.1%
Portland, OR 5.2%
MARKET VACANCY RATE MAR 31, 2016
Fresno, CA 5.2%
Louisville, KY 5.2%
San Jose - Silicon Valley, CA 5.4%
New Jersey - Central 5.6%
Houston, TX 5.8%
Cleveland, OH 5.9%
Huntsville, AL 5.9%
Austin, TX 6.1%
Las Vegas, NV 6.1%
Columbus, OH 6.2%
Jacksonville, FL 6.3%
Pittsburgh, PA 6.3%
U.S. AVERAGE 6.4%
New Jersey - Northern 6.4%
Kansas City, MO-KS 6.5%
Albuquerque, NM**** 6.5%
Ft. Lauderdale-Broward, FL 6.5%
Minneapolis/St. Paul, MN 6.8%
Fairfield, CA 6.8%
Raleigh, NC 6.9%
Hartford, CT 6.9%
Charleston, SC 7.0%
St. Louis, MO 7.1%
Dallas-Ft. Worth, TX 7.2%
MARKET VACANCY RATE MAR 31, 2016
Chicago, IL 7.2%
Dayton, OH 7.2%
Norfolk, VA 7.3%
New Hampshire 7.4%
Orlando, FL 7.4%
Indianapolis, IN 7.6%
Tampa Bay, FL 7.7%
Greenville/Spartanburg, SC 8.0%
Philadelphia, PA 8.2%
Stockton/San Joaquin County, CA 8.2%
Richmond, VA 8.3%
Atlanta, GA 8.3%
Columbia, SC 8.7%
Shenandoah Valley, MD-VA-WV 8.9%
Charlotte, NC 9.0%
Walnut Creek, CA 9.1%
Baltimore, MD 9.2%
Reno, NV 9.3%
Memphis, TN 9.4%
Washington, D.C. 10.1%
Birmingham, AL 11.0%
Sacramento, CA 18.6%
Phoenix, AZ 11.0%
Boston, MA**** 18.6%
U.S. | Vacancy Rankings
**** Q4-15 data displayedThe detail for markets with older data is removed, but numbers remain in totals and subtotals.
Copyright © 2016 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
Colliers International666 Fifth Avenue New York, NY 10103+1 212 716 3500colliers.com
INDUSTRIAL SERVICES | contactDwight Hotchkiss
President, Brokerage Services | USANational Director, Industrial | USA
+1 213 532 [email protected]
FOR MORE INFORMATIONJames Breeze
National Director of Industrial Research | USA+1 909 937 6365
Pete Culliney Director of Research | Global
+1 212 716 3689 [email protected]
CONTRIBUTORSJeff Simonson
U.S. Senior Research Analyst | USA
AJ Paniagua U.S. Research Analyst | USA
Andrew Nelson Chief Economist | USA
GlossaryBulk Space – Warehouse space 100,000 square feet or more with minimum ceiling heights of 24 feet. All loading is dock-height.
Flex Space – Single-story build-ings having 10 to 18-foot ceilings with both floor-height and dock-height loading. Includes wide variation in office space utilization, ranging from retail and personal service, to distribution, light industrial and occasional heavy industrial use.
Service Space – Single-story (or mezzanine) with 10 to 16-foot ceilings with frontage treatment on one side and dock-height loading or grade-level roll-up doors on the other. Less than 15% office space.
Tech/R&D – One and two-story, 10 to 15-foot ceiling heights with up to 50% office/dry lab space (remainder in wet lab, workshop, storage and other support), with dock-height and floor-height loading.
Warehouse – 50,000 square feet or more with up to 15 percent office space, the balance being general warehouse space with 18 to 30-foot ceiling heights. All loading is dock-height.