Executive Briefings

Logistics Space Vacancy Rates on Decline

Real estate giant Grubb & Ellis is forecasting the U.S. logistics space vacancy rate to drop to 11.5 percent in 2011 from the 12.8 percent seen in the fourth quarter of 2010.

"All the major components are present to justify expectations of demand outpacing the relatively strong performance recorded in 2010," the company said in its semi-annual Logistics Trends report. "The overall economy is expected to finally grow at above its potential, job growth is expected to accelerate and corporations have the cash (about $2tr at the end of 2010) and profits (corporate profits have returned to the all-time high previously recorded in the third quarter of 2006) to accelerate business investment.

"Supply will remain constrained. Currently, less than 7 million square feet of new logistics buildings is under construction across the nation, of which only 270,000 square feet is vacant. Additional projects will be announced during the year, but 2011 will be the year with the least amount of new deliveries on record. High demand and no new supply is a great combination for vacancies. By the end of 2011, Grubb & Ellis expects the overall logistics vacancy rate to fall to about 11.5 percent."

Demand surged in the second half of 2010, the company said.

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Real estate giant Grubb & Ellis is forecasting the U.S. logistics space vacancy rate to drop to 11.5 percent in 2011 from the 12.8 percent seen in the fourth quarter of 2010.

"All the major components are present to justify expectations of demand outpacing the relatively strong performance recorded in 2010," the company said in its semi-annual Logistics Trends report. "The overall economy is expected to finally grow at above its potential, job growth is expected to accelerate and corporations have the cash (about $2tr at the end of 2010) and profits (corporate profits have returned to the all-time high previously recorded in the third quarter of 2006) to accelerate business investment.

"Supply will remain constrained. Currently, less than 7 million square feet of new logistics buildings is under construction across the nation, of which only 270,000 square feet is vacant. Additional projects will be announced during the year, but 2011 will be the year with the least amount of new deliveries on record. High demand and no new supply is a great combination for vacancies. By the end of 2011, Grubb & Ellis expects the overall logistics vacancy rate to fall to about 11.5 percent."

Demand surged in the second half of 2010, the company said.

Read Full Article