U.S. industrial leasing activity increase 10.3% in 1Q10

NEW YORK: The industrial leasing activity in the United States has increased 10.3% to 60.4 million sq ft by annual pace in the first quarter of 2010, while construction completions have reached a record low, according to Cushman & Wakefield’s first quarter U.S. Industrial MarketBeat report.

The majority of U.S. industrial markets reported an increase in leasing activity year-over-year, with Orange County, Alaska, Jacksonville and the Greater Los Angeles area reporting increase of more than one million sq ft each.

“The improvements in retail sales and consumer confidence have been positive leading indicators for the industrial real estate market,” said Cushman & Wakefield’s executive managing director and head of Americas Research Maria Sicola in a statement on May 6.

While the overall vacancy rate for the U.S. continued to increase - reaching 10.8 percent at the end of the first quarter of 2010 - the number of markets that saw a quarterly decline in vacancy increased.

Limited construction completions sustained and kept vacancy increases low in other markets.

Just 3.2 million square feet of new space was added during the first three months of the year, a fraction of the five-year quarterly average of 26.2 million square feet, and the lowest amount of construction completions since Cushman & Wakefield began tracking the U.S. industrial market.

"While we did see an increase in projects currently under construction, the majority of these are being built on a build-to-suit basis, which bodes well for absorption," said Jim Dieter, executive vice president of Cushman & Wakefield's U.S. Industrial Services.

"We expect to see positive absorption in the U.S. and its major markets in the near future," he said.