While supply out-paced demand during 2019, developers are reacting to a somewhat protracted demand environment and slowing the pace of new construction starts with nearly half as much supply starting construction this year compared to last.
Pricing largely held fast during 2019 as vacancy trended upwards. Concession packages, lease terms and average lease sizes also remained relatively unchanged during the past year.
Demand persisted from an investment standpoint as sales volumes remained elevated compared to the 10-year average and cap rates remained low.
The pace at which 1 million-sq.-ft. warehouses were both absorbed and began construction provided little concern that this market segment will add to oversupply in the near term.