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Global Industrial Rents See Continued Growth
LOS ANGELES -- Global industrial rents have continued to grow, according to new research from CBRE, as a lack of significant new development has fueled global growth in prime industrial rents in 2011 and will underpin continued rent increases over the next two years.
Despite a weak economic outlook and a decline in industrial production, CBRE’s latest Global Industrial MarketView shows that demand from large scale industrial occupiers—particularly third party logistics (3PL) and retail distributors—has weathered the storm.
“Global industrial rents now reflect 2006 levels,” said Raymond Torto, CBRE’s Global Chief Economist. “This has been driven by rental movements in Asia Pacific where regional rents have now surpassed pre-global crisis levels, while prime rents in Europe, Middle East and Africa (EMEA) and the U.S. have still some way to grow before recovering from the downward cycle initiated in 2008.”
Demand, coupled with the limited availability of large, prime industrial facilities, has helped drive continued rental growth. CBRE’s Global Industrial Rent Index rose by 0.5% quarter-over-quarter in Q3, and by 1.7% year-over-year, driven primarily by strong occupier activity in Asia Pacific and the stabilization of rents in EMEA and the U.S.
“The U.S. was home to many of the largest industrial deals completed during the third quarter, as occupiers took advantage of leasing class A space in an opportune stage in the rental cycle,” said Ed Schreyer, CBRE Executive Managing Director, Industrial Services, The Americas. “Export demand also played a key role in the expansion of retailers and distributors in the U.S. during Q3, as the demand for retail goods led by the low value of the dollar continued over the period.”
The CBRE report monitors 55 prime industrial and logistics locations around the world. According to the report, significant rental growth (5% or higher) occurred in a number of markets in the third quarter, with the highest growth—7.5%—recorded in the Vancouver, Canada metro area. Vancouver primarily benefited from currency movements, while similar increases in a number of Greater China cities were driven by competition for logistics space ahead of the holiday season.
At US$21.84/sq. ft., prime industrial rents in Tokyo remain at high levels on a global basis, with relocation and expansionary requirements of online retailers and 3PL operators helping to maintain prime industrial rents in the aftermath of the Great East Japan Earthquake. London has the second highest rents at US$19/sq. ft. followed by Singapore at US$14.73, São Paulo/Campina in Brazil at US$13.98/sq. ft. and Sydney at US$11.36/sq. ft.
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