Declining US Industrial Vacancy Rates Tied To E-commerce Growth

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Jul 26, 2016, 09:05 ET

DALLAS, July 26, 2016 /PRNewswire/ -- The U.S. industrial vacancy rate dropped again in the second quarter, largely driven by companies building or leasing warehouse space to meet continued strong demand for e-commerce shopping.

Industrial vacancy fell to 8.8 percent in the latest quarter, down 20 basis points (bps) from the first quarter. The decline marked the 25th consecutive quarterly drop in available U.S industrial space.

The growing trend in e-commerce shopping is expected to continue to fuel demand for warehouse space, which is needed to store inventory for shipping directly to more consumers buying goods online.

And the industrial vacancy rate should continue its descent if the latest U.S. Commerce Department report on retail sales is any indication of this trend. In June, retail sales grew at 0.6 percent from the prior month and surpassed most analysts, who expected a modest 0.1 percent gain last month.

The retail sales report is generally seen as an important indicator for the direction of the U.S. economy, as consumer demand is a major contributor to stoking the country's economic engine.

According to Chris Roach, President of BBG Valuation, "Plummeting U.S. industrial vacancy rates signify that this sector of the commercial real-estate market is benefitting from increasing acceptance of the e-commerce model, and we anticipate this downward trend in vacancy rates will continue for at least the remainder of this year. We have seen first-hand of the growth in this industry, as a significant number of companies have used our services to complete transactions and secure industrial space to accommodate demand for their products, for both online and physical stores.

About BBG

BBG is a leading independent national commercial real-estate valuation and assessment firm headquartered in Dallas with more than 20 offices in key U.S. markets. BBG has achieved a reputation for personal attention, on-time delivery and deep expertise in multi-family, office, retail and industrial sectors. For more information about BBG, please visit www.bbgres.com

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SOURCE BBG