It’s no surprise to anyone at this point, but it bears repeating: These are just about the busiest times ever for the U.S. industrial market.
Cushman & Wakefield’s fourth quarter 2021 industrial report released earlier this month provides the evidence. According to the report, the U.S. industrial vacancy rate fell to 3.7 percent by the end of 2021. That’s an all-time record low.
How low is this rate? It is now 220 basis points below the 10-year historical average of 5.9 percent.
This low vacancy rate has resulted in higher rents, too. Cushman & Wakefield reported that industrial rents in the fourth quarter of 2021 jumped 9.5 percent on a year-over-year basis to $7.39 a square foot. Warehouse/distribution rents rose 6.6 percent during the same period to $6.63 a square foot.
In another high for the industrial market, the sector’s construction pipeline reached 568.3 million square feet in the fourth quarter of 2021. This is the second quarter in a row in which the pipeline exceeded 500 million square feet.
Cushman & Wakefield says that of the industrial product under construction, 492.3 million square feet of it is warehouse/distribution product.
This isn’t surprising, either, considering how comfortable consumers now are with ordering everything from food and electronics to clothing, jewelry and furniture online. Companies need to get these items to consumers as quickly as possible, meaning that they are in constant need of new warehouse facilities.
And as for 2022? Cushman & Wakefield predicts big things for the industrial sector. The brokerage predicts that the sector will see another 400-million-pluse square feet of industrial space absorbed this year.
What does this mean? Only that industrial will remain the darling commercial class throughout this year.