North American Industrial Big Box Market Reaches Record Highs
Colliers International Group Inc. has released its Industrial Logistics & Transportation Solutions 2016 Outlook – Big Box Market Report, a comprehensive analysis of industrial big-box transactions in North America’s eight largest distribution markets.
Colliers International Group Inc. is a global commercial real estate services company.
The study finds that 2015 was one of the strongest years to date for the industrial real estate sector in North America, with the big-box market leading in construction and transaction activity. In 2011, nine-million square feet of big-box space was built; in 2015, 61 million square feet were delivered.
“This report is a more detailed snapshot of how the shift from bricks and mortar to ecommerce is affecting businesses everywhere,” said Dwight Hotchkiss, a national director at Colliers International. “Businesses are now thinking more specifically about supply chains and are pivoting focus to delivery times. This is leading to an incredible surge in the big box sector.” Colliers defines big box as a building of 300,000 square feet or larger used primarily for distribution.
Colliers’ research of early activity in 2016 indicates another strong year for occupier demands—especially as the growing pressure from ecommerce for swift logistics will continue to influence this space across North America and beyond.
Among the conclusions of the report, there has been substantial recovery in the market since 2011. In 2011, speculative development totaled 623,000 square feet; in 2015, it totaled 34.8 million square feet.
Vacancy rates hit lows in 2015. In the second quarter, the vacancy rate hit 7.02 percent, its lowest of the year. While 2015 ended with a slight vacancy increase at 7.32 percent, this was due to speculative construction that had been completed during the year.
Considerable construction is still to come. In 2015, the market saw construction completion of 60 million square feet, with an additional 74 million square feet of construction underway for 2016 delivery.
Atlanta, Chicago, Dallas, Dallas, Houston, Los Angeles, and Toronto are among the metropolitan areas driving increases in the big box market. In Pennsylvania and New Jersey, despite a 38.9 percent decrease in leasing in the fourth quarter of 2015, construction activity continues to grow, from 12.1 million square feet completed in 2015 to 13.3 million square feet currently underway. In northern and central New Jersey, leasing activity in the fourth quarter of 2015 increased 36.3 percent over the third quarter, with construction activity following suit; currently 3.8 million square feet of new big-box space is underway.