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.