LOS ANGELES—The national industrial market iscontinuing to expand, according to the 2Q14 industrial report fromLee & Associates, which GlobeSt.com hasexclusively. Compared to the same time in 2012, vacancy rates havefallen to 7.8%, from 9.4%, as net absorption and gross absorptionhave been trending up for the past two years.

Industrial development is concentrated in the markets with themost available land, and, for that reason, will continue to grow ata faster pace than infill markets. This is something we have seenhere in Southern California, where developers are snatching up thelast remaining plots of developable land in infill markets, likethe recent REDA Bascom Ventures project launched in the City of Industry. Contributingto slowed growth in infill markets, some cities are encouragingdevelopers to redevelop older industrial areas for multifamily andretail projects. The combination has led to a shortage in qualityindustrial properties, leaving many users to either settle or waitfor a developer to augment the supply.

The report outlines the economic conditions that contribute tothis growth to offer a more robust outlook. According to Leeexperts, GDP growth has been the “primarybenchmark” in determining economic health. For a recoveringeconomy, GDP growth is currently far below that of growth in otherrecovery cycles, sitting at about 2% and leaving a lot ofuncertainty in the market. However, energy production, specificallytechnology that reduces natural gases and oil, have created anenergy boom that has a positive affect on GDP growth, and willalternatively help to grow industrial expansion and spaceabsorption.