Panama’s expanding economy is fueling demand for industrial and logistics space. Warehouse projects are sprouting on both sides of the Panama Canal, and they are filling up almost as fast as developers can build them, according to a new report. The vacancy rate in industrial space in Panama was 8.8 percent in March, reports Bulletin Panama, which tracks the logistics industry. The rate was a “very healthy level considering the high growth in supply,” the report says.
The inventory of the industrial real estate market in the first quarter increased by more than 145,000 square meters, reaching a total of 858,946 square meters of leasable area, the publication says. But demand for space continues to grow, as supply chains expand. The annual net absorption in Panama is 115,120 square meters, which represents 13.40 percent of the total inventory.
In many ways, the industrial market is a leading indicator of the residential market, and a key driver of sales and rentals in the city. The growth of the industrial center translates as more trained executives and managers looking for a new home.
The opening of the expansion of the Panama Canal on June 26 was only the next step in Panama’s ambitious plans. Panama wants to become “one of the most important cargo logistics centers for transportation and storage worldwide,” Bulletin Panama reports. And the government has been pushing to build the infrastructure necessary to support this expanding market.
“Public investment in infrastructure has become one of the fundamental pillars for the development strategy that Panama has to maintain growth in levels of productivity and competitiveness as a country,” the report says.
The new data suggests a balance in the industrial real estate market; it’s not growing too fast on speculative investments. “During the first quarter of 2016, the industrial real estate market continued to show signs of staying in the expansion phase of the real estate cycle,” Bulletin Panama reports. A large portion of the new construction is “built to suit” or “tailored,” which means it has been commissioned for specific companies, not built in hope of attracting a tenant sometime in the future.