Colliers International Group Inc. has released its Industrial Logistics & Transportation Solutions 2016 Mid-Year Outlook – Big-Box Market Report, examining influencing factors in six major North American distribution markets for industrial properties 300,000 square feet or larger.

Colliers’ analysis reveals that supply chain modernization—which is still in its infancy—and positive ecommerce sector growth continue to bolster the U.S. industrial real estate market, particularly big-box, which is experiencing a record number of tenants in the market.

“Ecommerce, which saw sales grow 15 percent over the previous year in the first quarter of 2016, is propelling a supply chain overhaul for retailers and wholesalers seeking to keep up with the demand for rapid delivery,” said Dwight Hotchkiss, a Colliers executive. “This overhaul often involves relocation and consolidation of multiple warehouses into larger state-of-the-art facilities near population centers, ports, and major intermodal facilities suitable for reaching consumers quickly.”

According to Colliers’ analysis, demand for big-box space remains exceptionally strong with only 157 of the 1,908 existing buildings vacant across the six core markets examined and a record 98 big-boxes, totaling 60 million square feet (MSF), added to inventory over the past year. During the first half of 2016, leasing increased by 10.7 percent year over year, with this demand spurring a 13.1 percent rise in effective rents to $4.77 per square foot per year.

With lower vacancies, higher effective rents and strong absorption, demand will continue to outpace supply in core markets. In Atlanta, increased demand from retailers and wholesalers is driving strong leasing and absorption with effective rents reaching post-recession highs. Demand in this market sparked 8.9 MSF of new big-box construction during the first half of 2016, compared to 6.1 MSF completed in all of 2015.

Chicago has seen wholesaler and ecommerce expansions driving continued increases in big-box construction with 11.7 MSF under way in the second quarter of 2016 to meet the need for modern distribution facilities.

In Dallas-Fort Worth, anticipated activity from the 30 MSF of active tenants in the market will drive new development absorption in the region, which saw 9.5 MSF of big-box space completed in the first half of 2016 versus 9.7 MSF in all of 2015.

Greater Los Angeles saw a record-breaking 45 big-boxes, totaling 22.8 MSF, added to the inventory this past year, bringing the total existing big-boxes in this market to 676, totaling 370.4 MSF—by far the most in North America.

In New Jersey eastern Pennsylvania, demand from logistics and ecommerce users has propelled the market to emerge as one of the most robust in the country. Big-box leasing activity has more than doubled between the second quarter of 2015 and the same period this year. During the first half of 2016, a total of 18.4 MSF was leased, the most for a core North American market.

In Toronto, construction activity continues to grow, despite a slow start to 2016. Developers are bullish on this market with just under six-million square feet of big-box space under way.

Overall, vacancy rates declined in 84 percent of the markets Colliers tracks. At mid-year only sic percent of the nation’s industrial space is vacant, the lowest on record. Vacancies dropped despite 63 MSF of new supply completed in the second quarter, breaking the previous record of 60 MSF set just last quarter. More than 77 MSF was absorbed, surpassing the previous record in the second quarter of 2015.

“With a record 204 million square feet now under construction,” the report concluded, development is not likely to ease any time soon as low vacancies continue to drive development across the country.”