The U.S. industrial market continues to work through the effects of the post-pandemic construction boom. Leasing activity remains healthy and has now returned to pre-pandemic norms, but elevated levels of recently delivered space continue to keep vacancy and availability above long-term averages and rent growth suppressed.
A continuing trend: Large logistics facilities (spaces over 100,000 square feet [SF]) remain most affected by excess supply, while smaller industrial properties have limited new development and steady tenant demand. Construction starts have declined significantly from peak levels, reducing future supply.
National industrial real estate trends
- Leasing activity has largely returned to levels consistent with pre-pandemic norms, although absorption remains modest relative to the volume of space delivered over the past several years.
- Smaller industrial spaces continue to show steadier demand and faster leasing, supported by limited new construction.
- National asking rents were essentially unchanged during the quarter, and annual rent growth remained 1.2%. This follows several quarters of slowing rent growth as elevated availability has increased competition for tenants in many markets.
- While recently completed projects continue to add inventory across many markets, fewer new projects are beginning construction. This trend has reduced the size of the future development pipeline.
Hot topic this quarter: Logistics cost & location strategy
A hot topic in today’s manufacturing space is the logistics cost and location strategy. Rising transportation costs, global shipping disruptions, and nearshoring and reshoring activity are prompting companies to re-evaluate where inventory, suppliers, and customers are positioned across North America.
Read the report to learn more about how transportation costs have re-emerged as a key supply chain and real estate consideration, and contact us for help identify the optimal facility location while balancing transportation expenses, workforce availability, and lease, buy, build, or consolidation alternatives.
Download the full industrial real estate market report to learn more
If you’d like to learn more about the nation’s industrial real estate outlook, download the full report below. This report will give you full insight into the topics mentioned above, along with a variety of other statistics to help you stay ahead of market trends.
Information contained in this report is provided, in part, from third-party sources, including the U.S. Bureau of Labor Statistics, the Bureau of Economic Analysis, Engineering News-Record, and CoStar Group. Even though obtained from sources deemed reliable, no warranty or representation, expressed or implied, is made as to the accuracy of the information herein.
