The Industrial Vacancy Rate Continues to be at Historical Lows

According to Cushman & Wakefield, the industrial vacancy rate increased for a second consecutive quarter but is still historically low at 70 basis points (bps) below the five-year quarterly average and 170 bps below the 10-year average.

According to the Q1 data, it was 3.6%, although several markets are still below 3%. Deals continue to be completed. Rent growth increased by 3.5% more since Q4 2022 and has increased by 17.2% since last year, driven mostly by strong returns in the Northeast over the past 12 months (22.4%).

The research states that after the pipeline of projects still under development has somewhat decreased (-3.0% since year-end 2022) completions are outperforming construction starts.

Nearly 20% of the 663.3 million square feet of industrial goods now under development has been pre-leased by tenants, while 84% is being developed on a speculative basis.

According to prepared remarks by Carolyn Salzer, Americas Head of Logistics & Industrial Research at Cushman & Wakefield, leasing at the moment is equivalent to 2019, “which was a tremendous year for industrial real estate.

In the upcoming three years, there will be more than 580 million square feet of net absorption, according to the Cushman & Wakefield Research March 2023 U.S. Macro Outlook report.