California's Industrial Booms With Online Retail Growth
California's industrial market is a busy one, with the warehouse side being driven by more online shopping and developers optimistic in their outlook for the next three years, according to the latest Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey.
CBRE vice chairman Barbara Emmons says it's an exciting time from the warehouse perspective because companies such as Amazon need less retail and more warehouse and distribution. Click here for Allen Matkins' industrial forecast video.
Even though the vacancy rates for warehouse are extremely low, those surveyed expect them to go down even further, says UCLA Anderson Forecast senior economist Jerry Nickelsburg. The outlook remains strong for the next few years, according to the survey.
Panattoni Development Co partner Mark Payne says the industrial market is very busy, with a lot of demand both from tenants leasing space and owner-users who want to buy.
Even those anticipating a correction in three to five years, such as Trammell Crow senior managing director Tom Bak, are building steadily for space to deliver this year and next. That quick turnaround works well with industrial buildings, which are pretty straightforward in design, he says.
The Inland Empire, where there has been a rush to develop, may have increased vacancy rates going forward, and Allen Matkin's John Tipton says it will be interesting to see how China's contraction affects that area.
External forces such as interest rates or global woes could affect the market, but overall, Barbara says, the fundamentals are solid. No one is overbuilding, lenders are cautious and it's all looking good for the next few years, she says.