Los Angeles -June 26, 2017 - Secondary warehouse and distribution-center markets such as Denver, Detroit and Portland are poised for growth as the push to build out and modernize supply chains enters its next phase, according to a new report from CBRE Group, Inc.
Most development of warehouses in the U.S. since 2011 has occurred in primary industrial markets such as Atlanta, Chicago and Greater Los Angeles. Those 13 primary markets saw a 30 percent increase in average rental rates and a decline to 4.9 percent vacancy in that span, according to CBRE.
In contrast, secondary industrial markets in the U.S. now are in better position than primary markets to absorb growth. Average rents in 17 U.S. secondary markets have increased by only 13 percent since 2011. But developers should be encouraged that the average rent in those markets have pushed past their pre-recession levels.
In addition, vacancy in those secondary markets stands at 6 percent, and it still is steadily declining.
"As infrastructure for e-commerce fulfillment expands, the industry will seek to expand its real-estate footprint in secondary markets to better cover a larger portion of population centers and increase delivery speeds," said David Egan, CBRE Americas Head of Industrial & Logistics Research. "As this unfolds, second-tier industrial markets like Cincinnati, Louisville, Charlotte and others offer ideal market fundamentals for developers and e-commerce companies looking to expand their supply chains."
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 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 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.