Based on Cushman & Wakefield’s first quarter 2011 statistics for the U.S. industrial market, continued momentum towards recovery is still in play with leasing activity increasing and vacancy continuing to decline. Additionally, new industrial construction remains historically low.
Industrial leasing activity in the U.S. totaled 68.0 million square feet in the first three months of 2011, up 12.5 percent from the 60.4 million square feet leased at this time last year, and the strongest first quarter since 2007, when 79.3 million square feet was leased. The U.S. industrial markets with the largest percentage increases in leasing activity included Long Island, NY (up 172 percent), Suburban Maryland (up 118.8 percent) and Silicon Valley, Calif. (up 65.1 percent).
The overall vacancy rate for the U.S. industrial market declined to 10.2 percent at the end of the first quarter of 2011, a 0.1 percentage point decrease from 10.3 percent at year-end 2010, and down from 10.8 percent at this time last year. Vacancy declined in 22 of the 34 U.S. industrial markets tracked by Cushman & Wakefield quarter-over-quarter, with the Inland Empire, Calif. (declined to 10.2 percent from 11.0 percent), Jacksonville, Fla. (declined to 11.6 percent from 12.2 percent) and Hartford, Conn. (declined to 14.0 percent from 14.7 percent) charting the largest declines.
New construction remained limited, with 3.2 million square feet of new product added to the market so far this year, on par with the 3.2 million square feet delivered in the first quarter of 2010, and the lowest amount of construction completions since Cushman & Wakefield started tracking the U.S. industrial market.
Overall absorption – which can be positive or negative in relation to whether more space is being occupied (positive absorption) or added to the market vacant (negative absorption) – was positive 7.7 million square feet at the end of the first quarter, up from negative 15.8 million square feet at this time last year.
“Leasing activity has returned to levels we haven’t seen since pre-recession,” said Jim Dieter, executive vice president and head of U.S. Industrial Brokerage. “With this strong rebound in demand, coupled with declining supply, the U.S. industrial market is steadily making its way towards recovery.”