Industrial Construction Can’t Keep Up with Red-Hot Demand

Logistics and industrial developers will look for ways to complement the instant gratification lifestyle.

HOUSTON—In the third quarter of 2018, the US industrial market benefited from record-high port volumes, positive absorption and a vacancy rate that remained below 5% despite the addition of new inventory. The continued enthusiasm for industrial product is examined in Transwestern’s third-quarter industrial outlook, which revealed rent growth across nearly every market tracked.

“High-quality infill remains in high demand by investors, causing average rent to blow by the $6 per-square-foot threshold,” said Matthew Dolly, Transwestern research director. “While construction continues at an aggressive pace, it can’t keep up with the red-hot demand. As a result, we’ve seen the US industrial vacancy rate drop 300 basis points in the past five years.”