U.S. net absorption again is up, vacancy is tight and warehouse rents are increasing across the board in nearly every market. New construction is on the rise in a handful of markets, but overbuilding is not yet a concern based on active tenant requirements.
The nation is on track to add 171 million square feet in completions this year, marking a 7-year high, but still under the 2007 cycle’s annual average of 184 million square feet. Net absorption is anticipated to exceed new construction for the sixth consecutive year. Average asking warehouse rents, meanwhile, are expected to have a 4.8% annual gain.
In San Diego County, direct asking rents increased 9.2 percent year-over-year and are currently $0.75 per square foot per month (NNN). This is only 2.7 percent below 2007 peak rents. Following over five years of robust absorption totaling over 7 million square feet, the supply of large blocks of space continued their steep decline. While there remain pockets of value and opportunity in lower demand submarkets, such as Otay Mesa, some of the major submarkets, such as Rancho Bernardo and Miramar have direct asking rents that have surpassed peak levels.
Read our Industrial Outlook to learn more about the markets around the United States as well as San Diego.
Post this: Per JLL’s latest Industrial Outlook, completions in the first half of the year totaled 83.6M square feet. Of this, 62% found tenants – anything at or above 50% suggests demand is keeping up with new development. Share on LinkedIn
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