HOUSTON – (Realty News Report) – Southeast Houston, with 4.7 million square feet under construction, ranked No. 5 in CBRE’s 2019 national list of industrial submarkets by construction activity.
North Fort Worth led the nation with 12 million square feet under construction, followed by South Atlanta, Northeast Atlanta and Ontario, California, CBRE reported.
According to the report, 289 million square feet of industrial and logistics space was delivered nationwide in 2019. CBRE noted that 60 percent of that new space was absorbed during the year, helping to alleviate immediate concerns about oversupply.
“With national vacancy at 4.4 percent, it had become difficult for occupiers to find modern space,” said James Breeze, CBRE Global Head of Industrial & Logistics Research. “This new supply is needed and will keep transaction activity strong, especially for larger deals. The robust activity in newly constructed product also explains the continued stream of groundbreaking announcements we are seeing.”
Another key factor supporting strong absorption of newly built space is the rise of built-to-suit development—construction tailored for a specific tenant. This segment accounted for 28.1 percent of new construction activity, as more companies require custom facilities to meet their operational needs.
Supply fundamentals are expected to remain stable this year, with 33 percent of the 309 million square feet currently under construction nationwide already committed. A preleasing rate of roughly 25 percent for projects under construction is typically a sign of a healthy leasing environment.
“With preleasing robust for projects under construction, the overall vacancy rate is expected to stay in check in the foreseeable future,” said Breeze.
March 5, 2020 Realty News Report Copyright 2020
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