Absorption of industrial property doubled in 2Q2024, even though the industrial vacancy rate rose to 6.1%, exceeding 6% for the first time in nine years.
The market’s absorption of 46.3 million SF reflected healthy market fundamentals, according to new data from Cushman & Wakefield.
“Although vacancy has continued to climb, it remains well below the 10-year pre-pandemic (2010-2019) average of 7%., Despite the rise in vacancy, industrial markets are showing increasing levels of demand after a sluggish Q1,” said Jason Price, Americas Head of Logistics & Industrial Research at Cushman & Wakefield.
He expects vacancy to peak at 6.7% next year as the markets stabilize, with developers waiting for demand to catch up and new supply leveling off. Meanwhile, new construction hitting the market in the second quarter totaled 121.1 MSF. This brought total new construction to 239.6 MSF – the second highest midyear total on record. Of that, 84% was speculative. Almost half of new construction was in the South.
Future supply is expected to contract. Construction starts remain muted, though slightly higher than in the first quarter. The under-construction pipeline slipped to just 343.4 MSF, declining by 14.4% since Q1, and down 46% compared to the prior year, with the South (down 118%) and Midwest (down 99%) most affected.
Speculative construction fell to 67.7%, compared to 71.4% in the first quarter. “The share will likely decrease further in the second half of 2024 as speculative warehouse facilities continue to deliver at a healthy rate and build-to-suit manufacturing facilities remain under development due to their longer construction timelines,” Cushman & Wakefield predicted.
Source “Industrial Absorption Doubles As Vacancy Ticks Higher”
