The U.S. industrial market is on pace to absorb more than 200 million square feet of space for the sixth consecutive year, according to the latest research from Cushman & Wakefield.
Cushman & Wakefield reported in its third quarter Industrial MarketBeat report that the U.S. industrial market absorbed 48.7 million square feet in the third quarter of the year. That brought the market up to 148.4 million square feet of absorption for the year to date, putting it on pace to crack that 200 million square feet milestone once again.
Cushman & Wakefield reported that new leasing activity remained strong in the third quarter, too, totaling 123.4 million square feet with year-to-date leasing activity reaching 402.3 million square feet, up 2.2 percent from the same period in 2018. According to Cushman, more than one-third of U.S. markets posted double-digit increases in new leasing activity on a year-over-year basis.
For more good news, check the U.S. industrial vacancy rate. Cushman & Wakefield reports that this rate remain unchanged in the third quarter, staying at an all-time low of 4.8 percent. That is 90 basis points below the five-year historical average of 5.7 percent for all product types. Industrial vacancy rates have fallen or remained steady in 44 of the 79 markets tracked by Cushman & Wakefield.
The tight market conditions and strong demand have resulted in rent growth in this sector, too, especially in warehouse/distribution product. U.S. industrial asking rents increased 3.2 percent from the third quarter of 2018 to hit $6.57 a square foot during the third quarter of this year, according to Cushman & Wakefield. Warehouse/distribution rents were even stronger, rising 8.3 percent during the same period to reach a new nominal high of $5.90 a square foot.
Finally, Cushman & Wakefield reported that there is now 337.6 million square feet of industrial product under construction in the United States. Of this, 254.1 million square feet are warehouse/distribution projects. This markets a record-high both in absolute square feet and as a percentage of inventory.
Cushman reported, too, that more than a quarter of the logistics product now under construction is made up of build-to-suit projecs with signed leases and tenants ready to move in upon completion. Of the remaining 181.6 million square feet of speculative warehouse/distribution product under construction, 72.3 million square feet, 40 percent, is pre-leased. This means that there is a total of 109.3 million square feet of speculative logistics space set to deliver in the coming three quarters.
