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High demand coupled with favorable cap rates are pushing investors to buy speculative construction, and developers are rushing to meet the demand.
The US industrial sector experienced a banner year in 2015—vacancy is at a low of 6.1% nationally and is expected to decline further while the national weighted asking rent for industrial space is $5.44 per SF and is expected to climb higher this year, National Real Estate Investor reports.
“Industrial real estate is a little bit like a sleeper story,” Jack Rosenburg, Colliers’ national director, logistics and transportation, told Bisnow in March. “But in this sector we’ve been singing ‘happy days are here again’ since 2011.”
The booming industrial demand has outstripped supply, spurring a burst in speculative construction. Over 62% of the industrial space under construction is speculative, with developers relying on the mantra "if you build it, they will come." [NREI]
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