Prime logistics rents increased globally in the year ending March 31, accelerating their growth in many markets, due to strengthening economies around the world and greater demand for distribution of goods bought both online and in stores, according to a new report from CBRE.
Prime logistics rents - which are the highest achievable lease rates for top-quality warehouse and distribution-center space - increased by 3.2 percent across the globe in this year's first quarter from a year earlier, according to CBRE. That exceeds the previous 12-month period's 2.2 percent global increase.
With a 13.4 percent increase in rents year-over-year, Seattle is now ranked fourth globally for the fastest growing prime logistics markets.
"Seattle's tight supply of strategically located industrial facilities is unable to satisfy the demand of active tenants in the market, leading to an unprecedented level of pre-leasing," said Andrew Hitchcock, Senior Vice President, CBRE. "Development constraints, significant growth in ecommerce demand and the diminishing stock of sites with direct access to major thoroughfares are contributing factors."
The biggest gainer globally was Vancouver, which posted a 29.1 percent increase due to its lack of land available for industrial development amid its growth as Canada's largest port. Other U.S. cities ranked in the top 10 fastest growing markets include Oakland, CA (14 percent gain) and New Jersey (up 9.5 percent).
Prime logistics rents offer a means of gauging the strength and momentum of the high end of warehouse markets across the globe. That the growth of prime logistics rents has accelerated globally bodes well for the industry's continued momentum.
"This is a positive indicator that we're still seeing global growth roughly six years after the U.S. market for Industrial & Logistics real estate began its recovery from the recession," said David Egan, CBRE's Global Head of Industrial & Logistics Research. "This underscores the theory that e-commerce-driven demand for logistics facilities has created a fundamental shift in this market, establishing new baselines for occupancy, rents and other measures."
CBRE examined rents in 71 global logistics hubs for its report. The company defines prime logistics rents as the highest achievable rent for industrial distribution space of the highest quality and specification in the best location within each market.
In the U.S., prime logistics rents increased by an average of 4.8 percent in the year ended March 31, propelled by gains in coastal markets.
"The three U.S. markets with the biggest increases in prime logistics rents - Oakland, Seattle and New Jersey - each are near busy seaports but have little land available for industrial development," said Adam Mullen, CBRE Americas Leader of Industrial & Logistics.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), 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 2017 revenue). The company has more than 80,000 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.