Industrial Real Estate Markets Lose Steam in Q4 2007, According to Colliers International

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BOSTON, Jan. 28 /PRNewswire/ — The U.S. warehouse market decelerated considerably in the fourth quarter of 2007, suggesting 2008 might be a comparatively subdued year, according to the Q4 Industrial report issued today by Colliers International, a global real estate services firm.

A combination of weak demand and rising completions pushed the Q4 vacancy rate up 17 basis points to register 8.12 percent. In terms of new supply, 55.5 million square feet (msf) was completed during the October through December period — up from the 44.2 msf injected during Q3. This brought the full-year new supply to 180.5 msf; in contrast, 2006 completions totaled 184.1 msf.

Industrial developments under construction decreased by 12.2 msf during Q4, clocking in at 141.3 msf. This comes in slightly above the 135.4 msf registered at the end of 2006.

“There’s no debating the fact that the warehouse market has weakened in step with the economy,” remarked Ross Moore, senior vice president and director of market & economic research at Colliers International. “Even though the export sector continues to fire on all cylinders, the strength of the domestic economy has been shaken. As a result, businesses are reluctant to sign leases. This situation may unfortunately persist through mid-year 2008, but Colliers remains confident that the underlying economy is strong and will thus respond favorably to recent actions by the Fed and other policymakers.”

In terms of absorption, Q4 absorption measured an underwhelming 26.5 msf — just half of the 55.7 msf registered at the end of Q3. This brought year-to-date absorption to 149.2 msf — a 14.4 percent decrease from the year-ago period, when absorption measured 174.3 msf.

In addition, many demand drivers posted downward swings during the fourth quarter of 2007. Most notably, the December ISM index came in well below the critical “50” level — at 47.7 — its lowest reading since April 2003. This suggests the manufacturing sector is contracting. On the plus side, the global economy is still showing robust growth, which serves to support the export sector.

All that said, rents for industrial space were marginally higher during the fourth quarter, with a 0.4 percent increase — bringing the national average to $5.62 per square foot (psf). This marks a 6.4 percent increase from the year-ago period, as at this time last year, rents registered $5.28 psf.

Finally, 24 United States warehouse markets saw vacancies decrease, while 31 saw them go up.
Industrial Space – Absorption
MARKET                    ABSORPTION        ABSORPTION
Q4 2007           Q4 2006
(SF)              (SF)
Atlanta, GA                               1,377,000         4,565,000
Bakersfield, CA                               9,000           229,000
Baltimore, MD                             1,507,000           275,000
Boise, ID                                  (157,000)          274,000
Boston, MA                                3,178,000          (502,000)
Charleston, SC                              692,000           841,000
Charlotte, NC                              (213,000)         (439,000)
Chicago, IL                               5,092,000          (664,000)
Cincinnati, OH                               27,000         2,031,000
Cleveland, OH                             1,351,000        (1,633,000)
Columbia, SC                                399,000           269,000
Columbus, OH                                320,000           333,000
Dallas-Ft. Worth, TX                      3,676,000         5,457,000
Denver, CO                                  528,000           443,000
Detroit, MI                                  14,000        (4,461,000)
Fresno, CA                                  300,000            50,000
Ft. Lauderdale, FL                          455,000           265,000
Greenville, SC                               14,000               N/A
Honolulu, HI                                116,000           330,000
Houston, TX                               3,062,000          (411,000)
Indianapolis, IN                            257,000           357,000
Jacksonville, FL                             81,000           644,000
Kansas City MO                            1,188,000           723,000
Las Vegas, NV                               881,000           171,000
Little Rock, AR                              62,000           (49,000)
Los Angeles – Inland Empire, CA          (2,759,000)        5,500,000
Los Angeles, CA                             439,000         3,166,000
Louisville, KY                             (250,000)          560,000
Memphis, TN                               1,265,000         3,553,000
Miami, FL                                (1,751,000)       (1,013,000)
Milwaukee, WI                              (130,000)         (450,000)
Minneapolis, MN                             (80,000)        1,640,000
Nashville, TN                              (224,000)        1,127,000
New Jersey – Central                        562,000           940,000
New Jersey – Northern                       312,000           784,000
Oakland, CA                                (619,000)          211,000
Orange County, CA                            49,000           319,000
Orlando, FL                                (292,000)        2,095,000
Philadelphia, PA                          1,859,000         2,602,000
Phoenix, AZ                                (192,000)          431,000
Pleasanton/Walnut Creek, CA                (256,000)          119,000
Portland, OR                                196,000           171,000
Raleigh, NC                                 140,000           777,000
Reno, NV                                    133,000            45,000
Sacramento, CA                              485,000           760,000
San Diego, CA                               606,000           379,000
San Francisco Peninsula – San Mateo, CA     377,000            36,000
San Jose/Silicon Valley, CA                (507,000)        1,898,000
Seattle, WA                               1,537,000         1,157,000
St. Louis, MO                               284,000           456,000
Stockton/San Joaquin County, CA             117,000               N/A
Tampa Bay, FL                               206,000           393,000
Washington, DC                              645,000           491,000
West Palm Beach, FL                        (235,000)         (552,000)
About Colliers

Colliers International is a global affiliation of independently owned commercial real estate firms. The organization’s 10,092 employees span the world in 267 offices in 57 countries. On a worldwide basis, Colliers manages 672,945,918 square feet, and has revenue of $US 1,620,958,439. For more information, visit www.colliers.com.

SOURCE Colliers International

© 2007 PR Newswire. All Rights Reserved.

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