C&W Updates NAFTA Industrial Market Findings

The commercial real estate services firm of Cushman & Wakefield has distributed its latest Industrial Research MarketNote for North America, indicating that the sector continues to show steady growth across the United States, Canada and Mexico.

In the U.S., even with the addition of 9.2 msf of speculative new construction, the U.S. overall industrial vacancy rate continued to trend down, ending the first quarter at 7.7%, 90 bps lower than one year ago.

Major markets with the lowest vacancy in the U.S. included Greater Los Angeles, Orange County, Philadelphia, Houston and the Inland Empire. A shortage of top-tier industrial space has placed upward pressure on rents, and first quarter provided clear evidence that industrial rents are starting to trend up. Fifteen markets posted double-digit annual rent growth.

These findings mirror those by the Coalition for America’s Gateways and Trade Corridors, suggesting that near-shoring is gaining momentum.

“Modernizing our land border-crossing processes and investing in much-needed infrastructure will ease congestion and tri-lateral commerce will benefit,” says Leslie Blakey, Executive Director of the Coalition for America’s Gateways and Trade Corridors.

In Canada, expansionary growth in Toronto was driven by the continued rise of e-commerce, which saw Amazon lease 521,000 sf in the GTA West in the fourth quarter of 2013, a commitment that will mushroom to about 730,000 square feet during 2014.

The development market in Toronto remains active with strong demand for newer product and a total of 2.1 msf of spec space currently under construction. Asking rents remain stable with Toronto ($5.27 per square foot) and Montreal ($5.00 per square foot) remaining competitive for industrial space. Major markets with the lowest vacancy in Canada included Vancouver (4.0%), Toronto (5.7%) and Calgary (7.4%).

Mexico, meanwhile, has substantial long-run potential and is on track to become one of the ten largest economies in the world by 2030. Mexico City is growing more sophisticated and as intermodal logistics platforms become more common, demand grows.

For Monterrey’s industrial real estate market, the development of new buildings reflects the continued confidence of investors and the current trends of a market that is sustaining growing activity. One of the most significant developments is Interpuerto Monterrey, located in Salinas Victoria, covering 3,200 acres in a strategic location right at the interconnection of Kansas City Southern Mexico and Ferromex rail lines.

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