Brick-and-mortar merchants are far from being free from the problems that plague their particular brand of retail, but even they have to look at online retail rising rents for warehouse space with a little bit of mirth. According to a new report from CBRE, things are about to get even worse.
CBRE Chief Economist for the Americas Jeffrey Havsy is warning online retailers that, though the demand for same-day delivery doesn’t show any signs of stopping, the space available in the warehouses and fulfillment centers merchants depend on to facilitate those deliveries very well might. As of Q2 2016, industrial warehouse space declined by 8.8 percent — the lowest such figure since 2001. Of the 57 major retail markets studied, 37 of them posted decreases to warehousing availability.
The only markets that did not — thanks to a bevy of recently completed construction projects — included Houston, Cincinnati, Denver, Minneapolis, California’s Inland Empire, South Central Pennsylvania, Cleveland and Honolulu.
“While we’ve had some shocks to the global economy, the U.S. economy still is moving along at a slow and steady space, and that will sustain industrial demand,” Havsy said. “Retail sales have been above expectations, posting pretty strong gains in April and May.”
Havsy estimated that 150 million square feet of industrial warehousing space would be added to the market by the end of 2016, though that’s a far cry from the 213.5 million added in 2006.