The rapid growth of online sales in the U.S. is pushing up demand, and prices, for the warehouses needed to get goods delivered to consumers faster.
Rental rates for prime warehouse space in the U.S. jumped 9.9% in 2015 over the previous year, real-estate brokerage firm CBRE Inc. said in a new report, as retailers and distribution companies snapped up scarce facilities near import gateways and population centers.
The growth in the U.S. far outpaced the 2.8% increase in industrial leasing rates that CBRE measured around the world, and six American markets were among the nine markets world-wide with the strongest growth in rents. The top rental rates in Oakland, with its scarce space and ready access to San Francisco Bay-area consumers, were by far the fastest-growing in the world, soaring 29.8% year-over-year, nearly twice the rate of prices in the Northern New Jersey region, another hot market.
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David Egan, CBRE’s head of industrial and logistics research for the Americas, said construction of new sites is lagging behind demand in new markets. CBRE expects the gap to continue this year and that rental rates in the top markets will rise 6%.
The growth is all about e-commerce, which Mr. Egan said is fueling high demand for industrial sites closer to population centers.
“There are huge premiums being placed right now on being close to the consumer—speed of service, speed of delivery is a critical component of why people choose to buy from one retailer over another,” he said. “To get the goods to consumers fast, you have to get close to them.
New reports on retail sales in the U.S. show online sales growing rapidly while sales at brick-and-mortar stores are stumbling. At the same time, inventory levels have been pushing upward as companies struggle to balance the need to keep goods close to consumers while they maintain stocks in both warehouses and stores.
In its report, CBRE said markets in Asia and Europe remained the most expensive for industrial real estate, with Hong Kong leading the world with rental rates for prime space reaching $ 28.94 a square foot, followed by rents in Tokyo, London, Singapore and Stockholm.
CBRE measured what it called prime industrial sites of greater than 100,000 square feet that were built for modern fulfillment needs, excluding smaller sites and facilities refurbished for logistics needs.
Write to Paul Page at [email protected]