- An ongoing import boom at U.S. ports is putting a strain on warehousing markets around seaports, according to a recent analysis from CBRE.
- Port-city markets had a warehouse vacancy rate of 3.6% at the end of 2020, which was 1 percentage point lower than the national average, CBRE said. "The low amount of available supply has led to record-high rental rates," CBRE said.
- Prologis saw a similar trend of rising rental rates in its most recent quarter. Rent grew 2.4% over the previous quarter in the U.S., and the company is raising its 2021 rent forecast to 6.5% YoY in the U.S. and 6% YoY globally, CFO Tom Olinger said on an earnings call Monday.
Warehousing is a hot commodity these days, with consumers spending on physical goods and companies holding more inventory.
"With all of the volatility and consumer changes of the past year, retailers and manufacturers have learned to build-up a healthy safety stock of inventory to limit supply chain disruptions," John Morris, executive managing director and leader of CBRE's industrial and logistics business in the Americas, said in an emailed statement accompanying the analysis release.
E-commerce represented 25% of new lease signings for Prologis in Q1, Olinger said. "The balance of leasing is diverse, with outsized growth among companies that provide food and consumer products as well as renewed momentum in the construction segment as housing expands."
The combination of spending and inventory holding led to record import levels in March at ports across the country, beating levels set during traditional peak seasons.
Industrial real estate markets surrounding ports need more supply to meet "surging demand," Morris said. "Without more construction, we will see rental rates continue to soar."
As rents in warehouse locations trend higher, Prologis said it would prioritize rents over its occupancy rate in all of its markets. Prologis' occupancy rate did dip in the quarter to 95.6%. The company could bring the figure higher if it wanted, but it's hawkish on the companies it works with, Chairman and CEO Hamid Moghadam told analysts. Amazon, XPO and Geodis are the company's largest customers.
"I would say everybody is pretty much doing well with the exception of the uses that support hospitality like convention, exhibition, people and things of that nature," Moghadam said. "The rest of the market is pretty, pretty strong."