Industrial REITs overwhelmed as space glut hits record high

41.7 million square feet of space will be added in two years.

The floodgates have been lifted, and a record-high supply of industrial space is raging towards industrial REITs.

According to Maybank Kim Eng, 41.7 million square feet of space will be added in 2015 and 2016, on top of the 21.1m sf of space added last year.

Supply far outstrips demand, with average annual absorption pegged at only 10.4m sf.

“Supply of factory, warehousing and business-park space is expected to touch a record. The last time this much of space flooded in was in 1995-1998, when space rose 80m sf or 37%. Back then, vacancies jumped from 2.9% to 10.8%. We are seeing similar patterns, with vacancies up from a low of 6.7% in 2011 to 9.0% in 2014,” stated the report.