Duke Realty CEO James Connor began his Q1 2019 earnings call noting that national markets according to CBRE vacancy across the U.S. remained at record low level 4.3% and has now been below 5% for over 13 quarters. First quarter asking rents grew and estimated 8% over the prior year nationally, he said.
For the full year, CBRE and other expect rent growth on asking rental rates to be in the 5% to 6% range. For the first quarter supply exceeded demand by about 1.6 million square feet, Connor said.
“We see supply and demand in balance for the remainder of the year and expect both to finish in the 200 million square foot range. We believe this balance combined with historic low vacancy rates will continue to provide an environment for strong rent growth. In addition, the March macroeconomic figures had been solid with favorable retail and e-commerce sales consumer incentive business inventories and employment data points,” he said. “Even with 2019 GDP growth projected to be in the low-to-mid 2% range, we still feel confident in the macro demand drivers for logistics space like increased truck tonnage poor traffic and intermodal volume all support a very favorable outlook.”
Turning to the company’s results, Connor said that they followed up a very strong 2018 with a solid start to 2019. “Given the significant leasing we had in the fourth quarter of 2018, we had a comparatively light quarter with leasing volume of 2.8 million square feet. We simply did not have that many expirations particularly any of any size to renew or backfill.”