Los Angeles - December 14, 2016 - Soaring demand from e-commerce and third-party logistics companies for warehouse and distribution facilities is likely to push demand above available space in the greater Los Angeles and Orange County region, causing asking lease rates and investor interest to climb in 2017, according to CBRE's latest research report.
"The fact that demand is likely going to exceed the available space, will cause asking lease rates to go up," said senior research analyst Jamil Harkness. "Warehouse and distribution space throughout the region will continue to fill up quickly especially due to demand from retail and retail-related companies."
The demand for big-box warehouse has been strong, prompting developers to continue with speculative developments across most size segments, although e-commerce movement put more emphasis on last-mile delivery systems and next-day shipping, according to the report. As a result this has and will continue to impact the location of new construction and the types of facilities needed in the coming year.
Moving into 2017, many of these speculative developments will draw strong interest as the race to get product to consumers redefines warehouse-distribution space. It is expected that many of the smaller developments will be utilized as pass-through warehouses to aid faster delivery to the consumers. As a result this has and will continue to impact the location of new construction and the types of facilities needed.
All this demand has made the region's industrial product a highly sought after investment class. Industrial investment volumes in the third quarter increased 31percent over the previous quarter. Investor demand for industrial assets is expected to continue to trend upward in 2017 due to the overall strength of industrial fundamentals in the region.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.