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