NEW YORK, N.Y., Aug. 30, 2016 (GLOBE NEWSWIRE) -- Colliers International Group Inc. (Nasdaq: CIGI ) (TSX: CIG ) today released its Industrial Logistics & Transportation Solutions 2016 Mid-Year Outlook – Big-Box Market Report, examining influencing factors in six major North American distribution markets for industrial properties 300,000 sq. ft. or larger. Colliers’ analysis reveals that supply chain modernization—which is still in its infancy—and positive e-commerce sector growth continue to bolster the U.S. industrial real estate market, particularly big-box, which is experiencing a record number of tenants in the market.
“E-commerce, which saw sales grow 15 percent over the previous year in the first quarter of 2016, is propelling a supply chain overhaul for retailers and wholesalers seeking to keep up with the demand for rapid delivery,” said Dwight Hotchkiss, National Director, Industrial | USA for Colliers International. “This overhaul often involves relocation and consolidation of multiple warehouses into larger state-of-the-art facilities near population centers, ports and major intermodal facilities suitable for reaching consumers quickly.”
According to Colliers’ analysis, demand for big-box space remains exceptionally strong with only 157 of the 1,908 existing buildings vacant across the six core markets examined and a record 98 big-boxes, totaling 60 million sq. ft. (MSF), added to inventory over the past year. During the first half of 2016, leasing increased by 10.7 percent year over year, with this demand spurring a 13.1 percent rise in effective rents to $4.77 PSF/year.
With lower vacancies, higher effective rents and strong absorption, demand will continue to outpace supply in core markets. Key market highlights from Colliers’ big-box analysis include:
- Atlanta – Increased demand from retailers and wholesalers is driving strong leasing and absorption with effective rents reaching a post-recession high at $3.02 PSF/year NNN. Demand in this market sparked 8.9 MSF of new big-box construction during the first half of 2016, compared to 6.1 MSF completed in all of 2015.
- Chicago – Wholesaler and e-commerce expansions are driving continued increases in big-box construction with 11.7 MSF under way in Q2 2016 to meet the need for modern distribution facilities.
- Dallas-Fort Worth – Anticipated activity from the 30 MSF of active tenants in this market will drive new development absorption in the region, which saw 9.5 MSF of big-box space completed in the first half of 2016 versus 9.7 MSF in all of 2015.
- Greater Los Angeles – A record-breaking 45 big-boxes, totaling 22.8 MSF, were added to the inventory this past year, bringing the total existing big-boxes in this market to 676, totaling 370.4 MSF—by far the most in North America.
- New Jersey/Lehigh Valley/Eastern PA – Demand from logistics and e-commerce users has propelled this market to emerge as one of the most robust in the country. Big-box leasing activity has more than doubled between Q2 2015 and Q2 2016. During the first half of 2016, a total of 18.4 MSF was leased, the most for a core North American market.
- Toronto – Construction activity continues to grow, despite a slow start to 2016. Developers are bullish on this market with just under 6 MSF of big-box space under way.
For a broader perspective on the industrial market overall, Colliers will also soon release its 2016 Q2 U.S. Industrial Market Outlook. Across the nation’s top 30 markets, Colliers’ forthcoming report finds that demand for larger, modern spaces created record-setting fundamentals in Q2.
Key takeaways from Colliers’ Q2 analysis of the broader industrial market include:
- Vacancy rates declined in 84 percent of the markets Colliers tracks. At mid-year only 6 percent of the nation’s industrial space is vacant, the lowest on record. Vacancies dropped despite 63 MSF of new supply completed in Q2, breaking the previous record of 60 MSF set just last quarter. Also, more than 77 MSF was absorbed, surpassing the previous record of 72 MSF in Q2 2015.
- New construction reaches record levels. With a record 204 MSF now under construction, development is not likely to ease any time soon as low vacancies continue to drive development across the country.
- Strong leasing and lower vacancies , especially in modern class A distribution centers, drove up asking rents in Q2 to $5.66 PSF/year, an all-time national record for the country. Asking rents for distribution space increased year-over-year in 87 percent of the markets Colliers tracks.
The full Colliers International Industrial Logistics & Transportation Solutions 2016 Mid-Year Outlook – Big-Box Market Report is available for download at http://www.colliers.com/en-us/us/insights/mar...box-report .
About Colliers International Group Inc. Colliers International Group Inc. (NASDAQ: CIGI ) (TSX: CIG ) is an industry leading global real estate services company with more than 16,000 skilled professionals operating in 66 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.
Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals’ Global Outsourcing for 11 consecutive years, more than any other real estate services firm.
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