- Greater demand for distribution of goods drove a 3.2% rise in lease rates for top-quality warehouse and distribution center space for the year ending March 31, according to a new study from CBRE.
- Prime logistics rents proved a way to gauge the strength of high-end warehouses, the 2018 Global & Industrial Logistics Prime Rents report said. Warehouses affording higher rents means industry is booming.
- Prime logistics rents are the highest achievable lease rates for top-quality warehouse and distribution center space. Of the 71 global hubs tracked by CBRE Research, 49 recorded an annual increase in prime rents, 11 had decreases and 11 had no change, according to the study.
North America is not falling behind when it comes to logistics growth. Four of the top 10 growing global hubs are in North America, namely: Vancouver, Oakland, Seattle and New Jersey.
The largest growth was in Vancouver, Canada’s largest port, at 29.1%. A low vacancy rate of 1.6%, combined with a lack of high-quality Class A logistics inventory, led to the port’s all-time-high annual rent. Logistics is on the rise in Vancouver because British Columbia had the second-lowest unemployment rate of any Canadian province, as well has increased infrastructure spending near key logistics nodes expected to reach $16 billion by 2025.
Oakland and Seattle, the study said, saw prime rent growth of 14% and 13.4% respectively over the previous year, driven by tightening supply and strong demand from industrial users, including third party logistics providers (3PLs), food & beverage, building supplies and consumer goods.
In the Americas, the study pointed out, supply chain and e-commerce dynamics have fueled rent growth at different rates across the region. Users in the U.S. and Canada have been “aggressively leasing space in response to both persistent economic growth and the structural shifts brought about by e-commerce. This has led to record-high rents in virtually all markets in both countries.”
To the South, Latin American growth has been “muted,” with only Ciudad Juarez and Bajio, Mexico, increasing. CBRE Research said the dollar's strength against the peso in 2017 and lower development costs reduced pressure to ask for higher rents.
The situation was similar in Argentina, which also doesn’t have the e-commerce levels of the U.S. and Europe. Prime rents remained flat in most of Brazil, which is in a deep economic recession. Only in Santiago, where companies have expanded their industry and logistics footprint, did vacancies decline and rents increase by 2.6%.