- 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.
About DTZ
DTZ is a global leader in property services. We provide occupiers and investors around the world with industry-leading, end-to-end property solutions comprised of leasing agency and brokerage, integrated property and facilities management, capital markets, investment and asset management, valuation, building consultancy and project management. In addition, our award winning research and consulting services provide our clients with global and local market knowledge, forecasting and trend analysis to make the best long-term decisions for their continuous success far into the future. DTZ has 47,000 employees including sub-contractors, operating across 208 offices in 52 countries. For further information, visit: www.dtz.com
About UGL Limited ABN 85 009 180 287
UGL Limited (ASX:UGL) is a global leader in outsourced engineering, property services and asset management and maintenance delivering essential services that sustain and enhance the environment in which we live. UGL comprises three business units including Engineering, Operations & Maintenance and Property providing services across the power, water, rail, resources, transport, communications, defence and property sectors. Headquartered in Sydney, Australia, UGL operates worldwide across 52 countries employing over 56,000 people.
For more information, visit: www.ugllimited.com
