- Amid increased occupier activity, U.S. logistics costs increased in all US cities during 2012, albeit at a modest regional average rate of 1.5% (in local currency terms), below inflation average of 2.0%
- Atlanta currently offers occupiers the most affordable prime logistics space in the U.S., followed by Dallas and Houston. These will remain the most affordable locations in 2017
- San Francisco and Miami will maintain their positions as most expensive logistics locations in 2017
- Despite above inflation growth in 2012, our five-year outlook for global logistics occupancy costs is muted at an average annual growth of 1.6%
- In the U.S. we forecast occupancy costs to grow by 1.9% over the five-year forecast period, as demand continues to outpace supply in a majority of the markets. But this increase will remain below projected inflation
CHICAGO, July 19, 2013 (GLOBE NEWSWIRE) -- DTZ today released the Global Occupancy Costs Logistics 2013 report revealing that occupiers in the U.S. will continue to witness cost growth over the forecast period. The five-year outlook is for an average increase of 1.9%, as demand continues to outpace supply in a majority of markets. Tenants in Boston will benefit from the lowest regional annual cost growth (1.6%), whilst Miami, Chicago and Houston will witness the strongest cost growth, averaging 2.2%. In Miami this will be due to strong tenant demand on the back of continued business expansion.
A report accompanying this release is available at http://media.globenewswire.com/cache/23705/file/20983.pdf
Karine Woodford, Head of Occupier Research and co-author of the report, comments: "Looking forward, global logistics occupancy costs are projected to increase by a modest rate of 1.6% to the end of 2017, below the global inflation rate. This is driven by increased future space supply across markets, which will limit potential rental growth. There are, as expected, significant differences between markets. While occupiers in Hong Kong and Milan are expected to benefit from falling costs, we anticipate rising costs in Dublin at 5.4% and Melbourne at 3.4%, supported by consistent tenant demand".
2012 saw U.S. logistics leasing activity pick up, with vacancy declines noted across all major markets. As such, occupancy costs increased in all U.S. cities during the year, albeit at a modest regional average rate of 1.5% (in local currency terms). It should be noted that the average regional growth in costs was well below the inflation average of 2.0%.
The biggest cost increases took place in the transport hubs of Houston (2.2%), Chicago (2.0%) and Atlanta (1.9%). Houston was the only market to see costs grow at a rate above the regional inflation average. There was strong demand for industrial space throughout the year, supported by the growth of Houston's port and the city's robust energy sector.
John Wickes, Head of Americas Research comments: "Chicago and Atlanta continue to undergo a steady recovery, reflected by solid leasing activity and moderate upward pressure on rents. The mature logistics hub of Los Angeles saw costs increase at a muted rate of 1.3%, as prime logistics space remains inadequate. At the other end of the scale, Seattle witnessed the lowest cost increases during the year, at 0.8%, followed by Philadelphia and Miami, both recording a 1.1% increase during 2012."
Atlanta currently offers occupiers the most affordable prime logistics space in the U.S., followed by Dallas and Houston. These will remain the most affordable locations in 2017, reaching $6.1 per sq ft in Atlanta, $6.8 sq ft in Dallas and $7.2 sq ft in Houston. At the other end of the scale, San Francisco and Miami will maintain their positions as the most expensive U.S. logistics locations in 2017. Meanwhile, Seattle will overtake San Diego as the third most expensive market in the U.S.
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CONTACT: FOR FURTHER INFORMATION CONTACT: John Wickes Head of Americas Research DTZ +1 312 424 8087 firstname.lastname@example.org Michael Piscoran Head of US Logistics DTZ +1 312 424 8222 email@example.com Media please contact: Karine Woodford Head of Occupier Research DTZ +44 (0)20 3296 2306 firstname.lastname@example.orgSource: DTZ, a UGL company