There is a strong correlation between U.S. retail sales and U.S. industrial leasing activity. Retail sales continued to rise for the fourth straight year and the wider economy continues to improve. The consumer confidence index ended 2013 at 78.1 – the strongest year-end reading since 2007. As the retail sector, including eCommerce, expands, demand for distribution space and large fulfillment centers rises.
U.S. LEASING MARKS STRONGEST YEAR SINCE 2005
U.S. leasing activity rose 6.2% in 2013 and measured 328.5 msf leased in 2013. The ten-year leasing average is 304.2 msf. Four major U.S. markets tracked by Cushman & Wakefield (Greater Los Angeles, CA; Chicago, IL; Inland Empire, CA; and Dallas, TX) reported leasing activity greater than 25.0 msf at the end of 2013. Positive absorption is expected to continue in the coming quarters and the current forecast bodes well for the economic climate.
GROWTH IN RETAIL SALES
U.S. retail sales increased 4.2% in 2013 and totaled $5.1 trillion. As companies continue to expand their omni-channel strategies, the retail sector continues to grow. Consumer spending is gaining traction and the robust spending helped accelerate the sector’s expansion.
DEMAND FOR LARGE WAREHOUSE SPACE HIGH
The big-box leasing trend continued in 2013. A total of 119 leases over 300,000 SF totaling 64.6 msf were signed in 2013, a 14.1% increase over the 107 leases totaling 56.6 msf signed in 2012. A total of 11 leases were signed in excess of 1.0 msf, with Procter & Gamble, Amazon.com, and Wal-mart leading the charge in regards to demand for large facilities.
Sources: Cushman & Wakefield Research. Only markets tracked by Cushman & Wakefield offices are included in this analysis.