According to CBRE research, warehouse development across the country hit a new high in Q1 2017 with 167 million square-feet under construction. However, 43 percent of that space is pre-committed, also a new high.
This demonstrates that user demand is still very strong and new space is being taken at a very healthy rate. Chicago is above the national trend, as 51.3 percent of its 10.3 million-square-feet of space currently under construction is pre-committed.
David Egan, America’s head of research, recently told GlobeSt.com:
An oversupply of new construction usually means a coming slowdown, but in the past few years, developers and lenders adopted a disciplined approach to new construction, a strategy dictated by worries about repeating the mistakes made in the run-up to the recession.
“The demand has been extremely high, but builders have not been as active as you might expect. The risk of oversupply is extremely low, if not non-existent.”
Egan concludes that the current state of the market should last for the next four-to-six quarters.
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To see the CBRE report, click here.