Most demand drivers are still in place; however, spiking energy costs are a distinct cause for concern - for the economy at large and in terms of fuel costs' impact on moving goods across the U.S. supply chain. That said, only a few markets have forecast a drop in demand in the current quarter - with the vast majority predicting leasing markets will remain robust in the coming months.
"While the overall economy appears to be slowing, the manufacturing and logistics sectors continue to post healthy gains, supporting a very strong warehouse leasing market," said Ross Moore, senior vice president and director of market and economic research at Colliers International. "We remain somewhat surprised that rents haven't moved higher as warehouse availability continues to shrink, but our forecast of a 10 percent increase in lease rates during 2006 still looks attainable."
Second-quarter vacancies measured 8.3 percent, vs. 8.5 percent during Q1 and 8.9 percent during the year-ago quarter. Warehouse rents increased by 3.2 percent during Q2, after declining marginally during the first quarter. Year-over-year, rents are up 3.9 percent.
New construction during the second quarter totaled 37.3 msf, as compared to 38.4 msf during Q1 and 37.8 msf worth of completions during the year-ago quarter. In terms of development, warehouse space under construction jumped by 6.0 msf during the second quarter to 114.5 msf, vs. 108.5 msf during Q1 and 84.6 msf at the end of Q2'05.
Metropolitan Warehouse Space Markets (ranked by June 30 ascending vacancy rate):
MARKET VACANCY RATE VACANCY RATE
MAR 31, JUNE 30,
2006 (%) 2006 (%)
Honolulu, HI 1.8 1.9
Riverside/San Bernardino - Inland Empire, CA 2.6 2.3
Los Angeles/Ventura County, CA 2.8 2.6
Bakersfield, CA 3.3 3.0
West Palm Beach, FL 3.5 3.3
Las Vegas, NV 3.9 3.3
Orange County, CA 3.8 3.5
Ft. Lauderdale, FL 4.6 3.9
Miami, FL 4.0 4.2
Reno, NV 6.1 4.4
Columbia, SC 4.7 4.4
Tampa, FL 5.8 5.2
St. Louis, MO 5.5 5.4
Nashville, TN 6.9 5.7
New Jersey - Northern 6.2 5.8
San Francisco Peninsula - San Mateo, CA 5.7 5.9
Charleston, SC 5.8 6.3
Cincinnati, OH 6.3 6.4
Oakland, CA 6.8 6.5
Seattle, WA 7.2 6.7
San Diego, CA 6.7 6.8
Houston, TX 7.2 6.8
Jacksonville, FL 7.7 6.9
New Jersey - Central 6.7 7.0
Orlando, FL 7.3 7.2
Indianapolis, IN 7.3 7.2
Fresno, CA 8.0 7.5
Milwaukee, WI 7.4 7.5
Phoenix, AZ 8.2 7.7
Louisville, KY 9.2 7.8
Boise, ID 8.1 7.9
Pleasanton/Walnut Creek, CA 8.0 8.5
Denver, CO 9.2 8.7
Kansas City, MO 8.9 8.7
Chicago, IL 9.3 8.9
Cleveland, OH 8.8 9.3
Philadelphia, PA 9.8 9.4
Portland, OR 10.1 9.5
Charlotte, NC 11.2 10.6
Dallas/Ft. Worth, TX 10.7 10.7
Columbus, OH 11.0 11.1
Little Rock, AR 11.0 11.1
Atlanta, GA 11.4 11.8
Minneapolis, MN 12.3 11.9
Sacramento, CA 11.6 12.0
Detroit, Mi 12.9 12.8
Hartford, CT 13.2 13.2
San Jose/Silicon Valley, CA 13.6 13.3
Austin, TX 16.0 14.5
Memphis, TN 15.4 16.0
Pittsburgh, PA 16.5 16.2
Baltimore, MD 14.4 16.3
Raleigh, NC 19.8 17.7
Boston, MA 25.7 25.4
About Colliers
Colliers International is a global partnership of independently owned commercial real estate firms. The organization's 9,141 employees span the world in approximately 250 offices worldwide. On a global basis, Colliers manages over 660 million square feet, and has revenue of over $1 billion.
