Jan. 22, 2016
A national JLL report shows continuing strong industrial market fundamentals in 2016, echoing the continued tenacity of Houston’s industrial market despite ongoing challenges posed by record-low oil prices.
2015 came to a close with another year of healthy U.S. industrial commercial real estate activity.
- U.S. industrial net absorption outpaced construction completions by nearly 50M SF in 2015.
- 4th quarter’s U.S. industrial vacancy rate reached a 15-year low.
- U.S. manufacturing continues to contract; yet domestic consumer demand remains pronounced.
- The average U.S. asking warehouse rent was up 5.5% year-over-year.
Strong market fundamentals have led us into 2016. Nationwide net absorption has outpaced new construction since 2010. Based on active tenant demand (an indicator of leasing velocity), absorption is expected to remain positive in 2016. Additionally, rents are still increasing nationwide thanks to continued tightening of market fundamentals. The average asking warehouse rent was up 5.5% year-over-year at the close of 2015. Rent growth across the country will be a driver of values this year.
Amid strong fundamentals, a number of factors are worth watching. The manufacturing PMI fell to 48.2 in December (after contracting for its tenth month), interest rates are rising and home sales are weaker than expected. Despite this, consumer demand remains pronounced across the country. For Houston, the question remains: When will the oil pricing collapse make its way to industrial and how will it manifest?
To view the full “First look at industrial” report click here.