NEW YORK — The U.S. industrial property market continues to tighten, with warehouse and distribution center availability hitting another historic low, according to the latest CBRE Industrial Availability Index. The report highlights how e-commerce growth is fundamentally reshaping logistics infrastructure needs nationwide.
Availability Rates Hit New Lows
Data shows industrial space availability dropped by 6 basis points to 7.3% in Q1 2024—marking the 31st consecutive quarterly decline. This represents a 20-basis-point year-over-year decrease, signaling intensifying market constraints. The shrinking availability reflects dwindling options for companies seeking logistics facilities.
E-Commerce: The Primary Market Driver
The report identifies e-commerce expansion as the dominant force behind soaring demand. As consumer reliance on online shopping grows, retailers face mounting pressure to deliver goods faster. This requires extensive logistics networks with strategically located warehouses to minimize delivery times.
"Speed has become the battleground for e-commerce competition," the report notes. Consumers increasingly expect same-day or next-day delivery, forcing companies to optimize distribution strategies. Proximity to population centers through "last-mile" facilities has become essential for meeting these expectations.
Inventory Positioning Compounds Demand
Beyond delivery speed, inventory positioning strategies further intensify warehouse needs. Retailers maintain stock closer to consumers to enable immediate order fulfillment, requiring substantial storage space in high-demand areas. This practice grows more critical as e-commerce volumes expand.
Supply Struggles to Keep Pace
Developers delivered 35 million square feet of new industrial space in Q1, but demand reached 42 million square feet—maintaining a significant deficit. While the gap narrowed slightly from 2023 levels, CBRE attributes this to seasonal delivery patterns rather than market correction.
Timothy Savage, CBRE's Chief Data Scientist, observed: "We're approaching equilibrium as supply catches up with demand. Strong fundamentals suggest this industrial cycle could extend through 2024."
Regional Variations Emerge
The report reveals stark regional disparities—31 markets saw availability decline while 25 experienced increases. High-demand areas correlate with dense populations and robust e-commerce activity, whereas less-developed regions show softer demand.
Future Market Directions
Key trends shaping the sector's future include:
Automation: Robotics and smart warehouse systems are becoming standard for improving efficiency.
Vertical Expansion: Multi-story warehouses gain traction in land-constrained markets.
Customization: Developers increasingly tailor facilities to specific tenant requirements.
The industrial sector continues demonstrating strong fundamentals, though investors must navigate varying regional conditions and evolving operational demands.