U.S. industrial vacancy has reached a 15-year record low. According to a recent report by Cushman & Wakefield, strong net absorption in the fourth quarter placed 2015 net occupancy gains among the strongest on record.
U.S. industrial markets absorbed 62.9 million square feet of space in the fourth quarter of 2015, up 9.1 percent from the previous quarter.
The report shows that net absorption registered 238.6 million square feet for all of 2015, placing it among the strongest years of net absorption gains on record. Industrial vacancy is now a full 220 basis points below the historical average.
The development pipeline remains strong, according to the firm. There’s currently 180.5 million square feet under construction and 172.4 million square feet were delivered in 2015.
John Morris, executive managing director of Logistics & Industrial Services for the Americas, expects continued strength in demand and believes the biggest unknown is supply.
The upward pressure put on commercial real estate, he said, continues and will make demand for industrial distribution product in 2016 similar to the pace of the past year.
The report notes that top 10 strongest markets in the fourth quarter 2015, in terms of demand for industrial space, were: The Inland Empire (6 million square feet); Dallas/Fort Worth (5.2 million square feet); Phoenix (4 million square feet); Atlanta (4 million square feet); Chicago (3.2 million square feet); Portland (3.1 million square feet); Nashville (3.1 million square feet); Central New Jersey (2.8 million square feet); Greater Los Angeles (2.2 million square feet); and the Pennsylvania I-81/I-78 Distribution Corridor (2.1 million square feet).