Magazine article Mortgage Banking

Industrial Maintains 'Torrid' Pace in 3Q

Magazine article Mortgage Banking

Industrial Maintains 'Torrid' Pace in 3Q

Article excerpt

The U.S. industrial sector continued its "torrid" pace in the third quarter, said Kevin Thorpe, chief economist and principal with Cassidy Turley, Washington, D.C.

"Demand for industrial space is now flirting with an all-time high this year and vacancy is nearing a new cyclical low," Thorpe said.

Industrial space absorption reached 41.2 million net square feet in the third quarter--the second-strongest performance in more than 20 years, behind only fourth-quarter 2012's 46 million square feet of absorption, Thorpe said. This pushed the national vacancy rate down to 8 percent.

"Development is ramping up, but there remains a major supply-demand imbalance right now that has rents rising aggressively in multiple markets," Thorpe said. He added that seven markets registered 10 percent rent growth or better in the third quarter alone, including Oakland East Bay and Los Angeles, California; Oklahoma City; San Antonio, Texas; and Baltimore, with several other markets not far behind.

"What is perplexing about the industrial sector is that we are observing some of the strongest fundamentals we've ever seen dating back 30 years, but we are not looking at some of the strongest pricing levels we've ever seen," Thorpe said. …

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