Increasing demand and higher asking rents show just how resilient the U.S. industrial market remains.
Cushman & Wakefield reported that in the second quarter of 2024, overall net absorption in the U.S. industrial market reached 46.3 million square feet. That’s a solid number and more than double the absorption number recorded in what was a sluggish first quarter of the year.
More than half of the U.S. markets tracked by Cushman & Wakefield Research yielded positive absorption in the second quarter, and absorption improved on a quarter-over-quarter basis in 36 different markets.
Also in the second quarter, asking rents for U.S. industrial space averaged $9.97 a square foot. That’s up 3.7% from the second quarter of last year. However, this rent growth is slowing. Cushman & Wakefield said that this year-over-year rent growth was the lowest since 2020.
Even with this largely positive news, it’s clear that the U.S. industrial sector is no longer in a boom period. Cushman & Wakefield reported that developers are pulling back on new construction in this sector.
According to Cushman’s research, 343 million square feet of new industrial space was under construction as of the end of the second quarter. That is down 14% from the first quarter. It’s also less than half of the peak of the 718 million square feet under construction in the third quarter of 2022.
Cushman & Wakefield predicts that the industrial construction pipeline will shrink further in 2025, something that will lower vacancy rates in the second half of next year.
Although the national industrial vacancy rate edged higher to 6.1% in the second quarter, this 40-basis-point increase was the lowest quarterly rise for the sector since the first quarter of 2023.
Cushman & Wakefield reported that this is the highest the vacancy rate has been in almost nine years, but that the rate still stands well below the 10-year, pre-pandemic average of 7%.
