Demand for new industrial construction remained strong in 2019 and the trend is expected to continue in 2020, according to a market report from real estate services and investment firm CBRE, released this month.
Although 289 million square feet of new construction exceeded 255 million square feet of net absorption last year, the researchers said demand for the space was "significant and eased any fears of oversupply." By the end of 2019, less than 40% of new construction was available for lease, keeping the industrial vacancy rate near its all-time low. What's more, robust pre-leasing is helping to keep potential vacancy rate increases in check, the researchers said.
Looking at market demand, the report shows the greatest need for space near major logistics hubs. Kansas City, Miami, Baltimore, and Greenville, S.C., all had vacancy rates for construction completion of less than 20%. Dallas/Ft. Worth was the best-performing core market in 2019, with nearly 75% of its 25 million square feet in new construction already leased, the researchers said.
Another 309 million square feet of space currently under construction is already 33% preleased, according to the report, and more than half of the under-construction totals in Charlotte, Cincinnati, Miami, Savannah, and St. Louis are committed.