Industrial Real Estate Market Shows Further Weakening at Midpoint of 2008, According to Colliers International’s Second Quarter Industrial Report

2008-08-04 07:30:00

Industrial Real Estate Market Shows Further Weakening at Midpoint of 2008, According to Colliers International’s Second Quarter Industrial Report

    BOSTON, Aug. 4 /EMWNews/ -- The U.S. warehouse market contracted

considerably during the second quarter of 2008, posting a drop in

absorption and a sizeable increase in vacancy, according to Colliers

International, a leading global real estate services firm. This notable

weakness suggests that the market for warehouse space will be further

challenged in 2008, due to a slowing U.S. economy.



    A combination of weak demand and rising completions pushed the Q2

vacancy rate up 34 basis points to register 8.52 percent. As for individual

metro areas, 36 markets experienced an increased vacancy rate while 20 saw

vacancies go down.



    In terms of new construction, 40.9 million square feet (msf) was

completed during the April through June period -- down from the 44.4 msf

injected during Q1. Year-ago second quarter completions came in at 39.6

msf.



    Industrial developments under construction jumped noticeably during the

second quarter, registering 124.4 msf of space. This compares with 115.4

msf at the end of the first quarter and 145.8 msf for the year-ago quarter.



    Absorption took a sharply negative turn in Q2 2008 -- posting its first

downward swing since Q1 2003. Occupied space declined by 9.6 msf in the

second quarter -- in stark contrast with the 12.0 msf of absorption

recorded during the January through March period. During the second quarter

of last year, absorption came in at 36.5 msf.



    "There's clearly a considerable amount of negative sentiment swirling

around the warehouse leasing market at this time," remarked Ross Moore,

executive vice president and director of market & economic research at

Colliers International. "A wait-and-see attitude prevails as companies seek

a better sense of where the economy is going before making any new lease

commitments. This is hampering any significant forward movement for the

industrial sector. That said, the export sector remains a bright spot,

showing it's not all doom and gloom for industrial."



    Many demand drivers posted downward swings during the second quarter --

however, the July ISM (Institute for Supply Management) manufacturing index

registered 50.0, which suggests that the manufacturing sector is suffering

only "minor" contraction. That said, construction, housing, and the auto

and retail sectors all continue to face downward pressure as we enter Q3.



    Rents for industrial space were marginally lower during the second

quarter, with a 1.3 percent decrease bringing the national average to $5.52

per square foot (psf). This marks a 0.7 percent decrease from the year-ago

period, as at this time last year, rents registered $5.56 psf.




Industrial Space -- Vacancy, year-over-year VACANCY RATE VACANCY RATE JUNE 30, 2007 (%) JUNE 30, 2008 (%) MARKET Atlanta, GA 11.5 11.7 Bakersfield, CA 2.7 5.4 Baltimore, MD 15.9 17.8 Boise, ID 5.8 6.6 Charleston, SC 5.1 7.1 Charlotte, NC 9.0 7.3 Chicago, IL 8.9 9.4 Cincinnati, OH 6.3 6.8 Cleveland, OH 9.3 7.7 Columbia, SC 3.8 2.9 Columbus, OH 10.6 11.2 Dallas-Ft. Worth, TX 9.9 9.7 Denver, CO 7.2 7.2 Detroit, MI 14.4 13.2 Fairfield, CA - 11.6 Fresno, CA 5.9 6.0 Ft. Lauderdale, FL 4.4 5.9 Greenville, SC 10.1 9.9 Hartford, CT 10.2 9.9 Honolulu, HI 2.2 4.0 Houston, TX 7.1 6.2 Indianapolis, IN 6.6 8.0 Jacksonville, FL 5.5 7.1 Kansas City, MO 7.7 6.5 Las Vegas, NV 4.7 9.1 Little Rock, AR 18.1 15.2 Los Angeles - Inland Empire, CA 5.0 9.9 Los Angeles, CA 3.0 3.3 Louisville, KY 7.4 7.6 Memphis, TN 14.7 13.9 Miami, FL 4.5 6.2 Milwaukee, WI 7.3 7.5 Minneapolis, MN 11.5 11.4 Nashville, TN 5.2 6.2 New Jersey - Central 8.1 7.8 New Jersey - Northern 6.6 6.5 Oakland, CA 5.6 7.6 Orange County, CA 3.7 4.4 Orlando, FL 5.3 8.4 Philadelphia, PA 8.0 8.6 Phoenix, AZ 9.7 13.9 Pleasanton/Walnut Creek, CA 8.4 9.2 Portland, OR 7.0 7.4 Raleigh, NC 16.9 18.1 Reno, NV 6.4 10.2 Sacramento, CA 11.6 10.5 San Diego, CA 8.1 8.5 San Francisco Peninsula - San Mateo, CA 4.1 5.1 San Jose/Silicon Valley, CA 9.3 10.0 Santa Rosa/Sonoma County, CA - 10.3 Seattle, WA 7.4 6.3 St. Louis, MO 5.7 6.6 Stockton/San Joaquin County, CA 9.7 11.8 Tampa Bay, FL 5.1 6.7 Washington, DC 9.4 10.5 West Palm Beach, FL 6.0 8.6 US 8.2 8.5

    About Colliers



    Colliers International is a global affiliation of independently owned

commercial real estate firms. The organization's 11,000 employees span the

world in 293 offices in 61 countries. On a worldwide basis, Colliers

manages 868,000,000 square feet, and has revenue of $US 2.0 billion. For

more information, visit http://www.colliers.com.





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