U.S. Industrial Property Market Shows Definitive Signs of Entering Recovery Cycle

SEATTLE, Feb. 10, 2011 /PRNewswire/ -- Coinciding with a noticeably improved United States office market, the national industrial property sector absorbed 28.6 million square feet of space during the fourth quarter of 2010, propelling what had been a net loss for the year into a solid gain, according to new quarterly research on the U.S. industrial market from Colliers International. This robust fourth quarter activity likely heralds the beginning of the next up cycle for the industrial sector as demand for warehouse space — fueled by an increase in import and export activity and improving appetite for consumer goods — is expected to rise.

While the industrial property sector took a significant turn that will likely accelerate through the end of 2011, a handful of markets including Charleston, Cincinnati, Dallas-Ft. Worth, Inland Empire, Little Rock, New Jersey, Philadelphia, Phoenix and Savannah saw a substantial jump in occupied space (relative to their size) and contributed nearly 70% of total occupancy gains. Until this level of recovery broadens into additional markets, expectations for dramatic improvement in the overall market should be tempered. And despite sizeable gains in net absorption, average asking rents for industrial space on a national basis declined slightly to $4.60 per square foot. The good news is that rising demand for space, coupled with minimal new construction and an overall vacancy rate that dropped to 10.74 percent (with further expected declines) position the national industrial sector for a strong 2011.

The Colliers International Q4 2010 North America Industrial Highlights report notes that the overall industrial market registered an increase in occupied space for each of the past three quarters. And though approximately five million square feet was returned to the market through Q3 2010, by year-end 23.7 million square feet of inventory had been absorbed, thanks to a robust fourth quarter. The rebound is particularly impressive when compared with 2009, a year that saw 160.7 million square feet returned to the market.

Net absorption refers to the amount of space occupied at the end of a period minus the amount occupied at the beginning of that period. It also takes into consideration any space that was vacated during the period.

Given the positive momentum, Colliers International projects that 50 million square feet of quarterly absorption is well within reach for 2011. And if GDP improves by three percent this year, as some economists predict, the industrial market could generate as much as 200 million square feet of positive absorption for the year.

"The national industrial market has made a significant rebound and is positioned to meet, and possibly exceed, growth expectations in 2011," said Dylan Taylor, chief executive officer for Colliers International in the U.S. "The fundamentals continue to improve, and barring any unforeseen events, we are confident that the industrial sector will have an extremely positive year."

"Manufacturing, along with consumer spending, is going to be a key element of the overall national recovery, with almost all economic indicators suggesting that warehouse space demand will only increase in 2011," said Ross Moore, chief economist at Colliers International. "The turnaround presents an opportune time for tenants to sign new leases, as 2012 will likely witness the inflection point at which industrial space rents begin to march upwards."

Additional highlights from the full research report, which analyzed the nation's 55 largest industrial markets, are listed below:

• Charleston, Chicago, Cincinnati, Dallas-Ft. Worth, Inland Empire, Little Rock, New Jersey, Philadelphia, Phoenix and Savannah all saw positive absorption in excess of 1 MSF in Q4 2010.
• Industrial markets with the highest rents at year-end 2010 included Honolulu, the San Francisco Peninsula, San Diego, Washington, D.C., and West Palm Beach.
• Completions of new product totaled 9.4 MSF, a substantial increase from 4.4 MSF in Q3 2010 and a modest increase from 7 MSF in Q4 2009. Of the 9.4 MSF delivered in Q4 2010, 71 percent was build-to-suit.

Additional data and research are available in the full report.

Note to Editors: A PDF version of the full Q4 2010 North America Industrial Highlights report is available at: http://www.colliers.com/Country/UnitedStates/content/industrialnahighlights4q2010.pdf.

About Colliers International

Colliers International is the third-largest commercial real estate services company in the world with 15,000 professionals operating out of more than 480 offices in 61 countries. A subsidiary of FirstService Corporation (Nasdaq: FSRV; TSX: FSV and FSV.PR.U), it focuses on accelerating success for its clients by seamlessly providing a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and research. Commercial Property Executive and Multi-Housing News magazines ranked Colliers International as the top U.S. real estate company and the latest annual survey by the Lipsey Company ranked Colliers International as the second most recognized commercial real estate brand in the world.

SOURCE Colliers International