TIPPING POINT FOR SPECULATIVE DEVELOPMENT, RATES JUMP DRAMATICALLY
The absorption momentum we saw in 2017 continued in the first quarter of 2018. With tenants competing to make attractive offers on limited available space, the market-wide average asking rate increased faster than it ever has. Investors also displayed a healthy appetite during Q1, driving the average per-square-foot price up and the average cap rate to an all-time low. The real story for the remainder of 2018 will be development. Construction employment in the region is up 14.1 percent over last year, and nearly one million square feet of industrial product should be delivered in 2018. We anticipate several new projects will be announced in the next few months, in a quick reaction to the recent increase in rates. The question is, will any succeed at adding another spec building to inventory before year’s end?