New wrinkle in total landed costs

When the commercial real estate service Cushman & Wakefield released its year-end national market research data this week, some important regional advantages were outlined in detail.

By ·

When the commercial real estate service Cushman & Wakefield released its year-end national market research data this week, some important regional advantages were outlined in detail.

For example, greater Los Angeles continued to lead the nation, with 35.8 million square feet in activity, followed by Chicago with 30.9 million square feet. Seventeen of the 37 markets tracked by Cushman & Wakefield reported increased activity in 2013.

Fourteen of these markets posted double-digit annual increases. Northern New Jersey posted an impressive 40.0 percent increase, while the PA I-81/I-78 Corridor recorded a 30.0 percent year-over-year increase.

Additionally, net demand is up 23 percent from last year, with only one out of 37 markets tracked recording negative absorption. Dallas/Fort Worth led the nation with 15.1 million square feet of occupancy gains in 2013, followed by the Inland Empire with 12.6 million square feet.

As a result, the U.S. vacancy rate is tightening rapidly. It fell to 7.5 percent in the fourth quarter, down 80 basis points from a year ago and 330 basis points lower than its recent peak in first quarter 2010. Analysts note that the overall vacancy rate has now declined for 13 consecutive quarters. In the warehouse sector, vacancy has reached its lowest rate in five years, declining for 15 consecutive quarters. Strong demand Class A space has led to its short supply.


The resulting upward pressure on rents brought the average direct asking rate to $5.92 per square foot in the fourth quarter of 2013, a 4.2 percent year-over-year increase. Rents are still 13 percent below their peak level achieved in 2008, but they have been inching up slowly since second quarter 2011.

Ultimately, these positive fundamentals have sparked a new wave of development. As the year came to a close, 79.4 million square feet of new industrial space was under construction, up 87 percent compared to year-end 2012. New development is particularly strong in Inland Empire, Chicago, Dallas/Fort Worth, Houston, Central New Jersey and the PA I-81/I-78 Distribution Corridor. Each of these markets has 4 million square feet or more under construction.

Ecommerce continues to drive demand for modern logistics facilities, analysts add. Online sales are anticipated to reach $370 billion by 2017, up from $231 billion in 2013, which will continue to benefit this sector. Traditional brick-and-mortar companies, like Home Depot and Walmart, also are playing a key role in the “industrial development pipeline.”

Analysts anticipate continued progress in 2014. “Less fiscal drag and reduced uncertainty should lead to stronger economic growth this year.

Considering that demand for industrial space has been consistently strong through the economic resurgence so far, it should remain so as the recovery becomes more robust, say Cushman & Wakefield researchers.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

Logistics · Risk Management · Warehouse · All Topics
Latest Whitepaper
Identify Cost Savings with Real-Time Visibility
To offset the impact of late shipments, unreported delays and detention, shippers are increasingly requiring 100 percent visibility into the location and status of their freight.
Download Today!
From the August 2017 Logistics Management Magazine Issue
Which carriers, third-party logistics providers, and North American ports have crossed the service excellence finish line ahead of their competitors? Our readers have cast their votes, and now it’s time to introduce this year’s winners of the coveted Quest for Quality Awards.
BMW Takes the Inland Road to Efficiency
Global Logistics: No Shortcuts to Security
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...
2017 Top 50 3PLs: Investment and Consolidation Maintain Traction
The trend set over the past few years for mergers and acquisitions has hardly subsided, and a fresh...

2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...