Grubb & Ellis Co., a leading real estate services and investment firm, released its Logistics Market Trends report for the second quarter of 2009, which revealed that decline in retail sales, manufacturing activity, and international trade, combined with the delivery of new speculative space to the market, caused vacancy rates for the logistics sector to increase for the ninth consecutive quarter.
The report also states that new development has dried up to just 9.2 million square feet of space, a sharp decline from the 60.4 million square feet of space in mid-2008, despite the increase of the vacancy rate to 13.3 percent since the first half of 2008.
Additionally, several rail operators have announced plans to expand existing and build new intermodal facilities in markets in Greencastle, PA; Memphis, TN; North Baltimore, OH; Rossville, TN; and San Antonio.
According to Grubb & Ellis researchers, the decrease of new construction and the demand expected to be generated by these expanded and new intermodal hubs are critical components of the logistics market’s return to health.
“Demand is expected to pick back up in the second half of this year – new orders are rising while inventories are very low, meaning that manufacturers will need to increase hiring and production in the near term,” says Bob Bach, senior vice president and chief economist at Grubb & Ellis. “Not only does this bode well for manufacturing space, but it also will bring relief to the logistics sector as these products begin to move through the supply chain and logistics users absorb some of the excess space to satisfy the increase in activity.”
The complete Logistics Market Trends report for the second quarter of 2009 is available at www.grubb-ellis.com/research.