“This region stands among the top industrial markets in the country, as it’s driven by the port activity in Los Angeles and Long Beach,” Hotchkiss says. In fact, in the first quarter the Los Angeles/Inland Empire area was the top market in the country for absorption, with 5.2 million sq. ft. of space. The vacancy rate in Los Angeles itself was only 1.9 percent, compared to the average of 7 percent for the entire U.S. industrial market.
The vacancy rate on the San Francisco Peninsula is now 2.5 percent—50 basis points below what it was in the fourth quarter—while the vacancy rate in San Jose is at 6.8 percent, also representing a 50 basis point drop. “The Central Valley, in particular, has become an area to watch,” Hotchkiss points out. “the region has seen a great increase in user interest and institutional investment.”
Dallas, in Hotchkiss’ view, “offers an ideal location as a major distribution hub in the center of the country. We’ve also seen major industrial development occurring here over the past three years.” The industrial vacancy rate in the Dallas/Fort Worth, Texas area, however, was still quite high in the first quarter at 8.0 percent, and that was an increase of 20 basis points from fourth quarter 2014.
“A number of notable investments have occurred in this region as a result of the explosion of business with LATAM.” The industrial vacancy rate in Miami, for instance, fell 30 basis points from the fourth to the first quarter, to 5.4 percent. The vacancy rate in West Palm Beach is currently at 5.9 percent.
“New Jersey also continues to stand as a top market for its location as a major distribution hub on East Coast.” Northern New Jersey made Colliers’ list of Top 5 Markets for space absorption in the first quarter, with 3.5 million sq. ft. In Northern New Jersey, the industrial vacancy rate fell 90 basis points quarter over quarter, to 7.1 percent. In Central New Jersey, the vacancy rate went down 50 basis points, to 7.6 percent.
“We are seeing greater interest in this market with the expansion of the Panama Canal.” Atlanta was another city that made it to the Top 5 for space absorption, with 3.7 million sq. ft., and the vacancy rate there fell 40 basis points in the first quarter, to 8.6 percent.
According to Hotchkiss, “Seattle has become a growing market that has seen greater interest in new development and investment from institutional clients.” The industrial vacancy rate in the Seattle/Puget Sound, Wash. dropped 30 basis points in the first quarter, to 4.4 percent.
According to Hotchkiss, “Chicago continues to be a noteworthy market as it’s a key logistics center in the U.S. for trains coming from West Coast.” Vacancy in the city averaged 7.6 percent in the first quarter, a drop of 10 basis points from the fourth quarter of 2014.