Demand for industrial warehouse worldwide remains strong

8th July 2013/ PRNewswire-USNewswire


Despite anaemic job growth, the demand for industrial warehouse space and modern distribution centers remains strong, according to Colliers International’s Global Industrial Midyear 2013 Highlights Reports. London, Hong Kong and Singapore are taking the lead in industrial warehouse rental, while around the world, industrial buildings near full occupancy.

Key Findings

Colliers market experts point to increases in industrial demand, specifically in Asia and the Americas, and highlight causes for stagnation in other areas:

  • Modern, Build-to-Suit in High Demand: Institutional investors’ anxiety about the multifamily market has spurred demand for modern warehouse properties near ports and inland distribution centers.  New space is often build-to-suit for major retailers and manufacturers, as an estimated 40 percent of existing U.S. warehouse space is old enough to be considered functionally obsolete.
  • Construction Booming in Mexico: Similarly, Mexico has seen slowed economic growth, and experienced a slight increase in vacancy after several industrial facilities were vacated. However, 14 industrial properties are under construction in the market, and once complete, they will add more than one million square feet of inventory. An additional two million square feet are in the planning stages, and expected to be complete by 2015.
  • South American Market Matures, Moves Away from the City: While Sao Paulo seems to have stabilized, the Bogota market absorbed more than two million square feet of warehouse space in the second half of 2012, which was 28 percent more than the same period in the previous year. Since 2008, industrial developments have moved toward the city’s outskirts, producing 99 percent of available land.  In fact, roughly 570 acres of land are available in the market – the highest ever recorded.
  • China Sees Long-Lead Lease Renewals:  Long-term, increased consumer demand will drive the need for high-quality logistics properties throughout Asia Pacific industrial sectors. While some construction projects aimed at alleviating growing pains are in the works, several are not expected for completion until 2014. As a result, many logistics companies, for example in Hong Kong, have had to negotiate with landlords for lease renewals about one year ahead of lease expiration.
  • India Invests in Multi-Brand Retail Trading: Economic growth remained stagnant in India. However, industrial activity is slated to improve after a 51 percent foreign direct investment in multi-brand retail trading goes into effect, along with the government-proposed National Investment and Manufacturing Zones.
  • Prime Rent Increases in Germany: The availability of modern space across Germany is limited, which has driven prime rent increases in major cities. Munich in particular has seen growth among automotive manufacturers, while the high purchasing power in the region has given retailers the opportunity for expansion.

“While the North American market has seen solid performance, from a global perspective, industrial market activity has been somewhat patchy through the first half of 2013,” said KC Conway, Chief Economist | USA.  “While markets like Hong Kong and Sydney are nearing full occupancy, other markets like Seoul are experiencing uneven industrial demand. Latin America and EMEA are also working to manage some imbalance in supply and demand. Through the end of the year, we expect to see market resilience, increased demand for logistics and distribution center space, and development driven by build-to-suits.”

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