San Francisco – At current supply and demand rates, U.S. warehouse tenants could utilize available inventory in 16 months, a record benchmark for warehouse space inventory, according to Prologis, during from a recent webinar.
“It may seem like a long time, but before 2021, this rate had never gone below 32 months,” said Heather Belfor, head of US research at Prologis. “This is by far the shortest period in history.”
The warehouse vacancy rate is 3.2%, a record high, and rents are expected to rise 22%, according to the company.
Prologisa real estate investment trust that invests in warehouses, among other properties, was created by the merger of AMB Property Corp. and ProLogis in June 2011, making Prologis one of the largest industrial real estate companies in the world.
According to the company, industrial rents increased by 8.5% between the fourth quarter of 2021 and the first quarter of 2022. New building construction deliveries were below expectations, driving vacancy down to an all-time low.
Even with 375 million square feet of new retail space slated to come online in the U.S. later this year, competition for space and supply chain issues have accelerated rent increases, according to Prologis. .
Consumer buying habits are also fueling demand for warehouses: for every percentage change in retail sales from stores to online sales, retailers need 50 million square feet of new distribution space, Belfor said. . Last year, US consumers spent $885 billion online, and this year they are expected to reach $1 trillion for the first time. according to software developer Adobe.
Melinda McLaughlin, Global Head of Research at Prologis, said during the webinar: “The rapid pace of structural change in consumer habits and inventory patterns has led to pent-up demand for space that cannot be expressed. into existing stock due to low vacancy or as easily into new developments due to supply chain delays that keep projects stuck in the construction pipeline.