The U.S. industrial vacancy rate rose slightly in the fourth quarter of 2024, increasing by 20 basis points to 6.7%, according to Cushman & Wakefield‘s latest research. But in good news, despite the uptick, the rate remains 30 basis points below the 10-year pre-pandemic average, signaling relative market stability.
“Industrial vacancy is likely nearing its peak for this cooling cycle in the coming quarters,” said Jason Price, Senior Director and Americas Head of Logistics & Industrial Research at Cushman & Wakefield, in a written statement. “In the fourth quarter, we observed positive annual absorption in 60% of the 84 markets we track, with eight markets reporting over 5 million square feet of absorption for the year.”
Absorption trends
Net absorption for the fourth quarter measured 36.8 million square feet, up from 33.3 million square feet in the third quarter but down 20% year-over-year.
For the full year, about 135 million square feet of industrial space was absorbed, reflecting challenges related to occupier consolidations and adjustments throughout 2024.
Leasing activity moderates
New leasing activity remained subdued in the fourth quarter, totaling approximately 130 million square feet—a 15.7% decrease compared to the same period in 2023.
Over the course of the year, 591.3 million square feet of deals were transacted, marking a 4.8% decline year-over-year.
The performance of the U.S. industrial market is all relative, though. Despite the slowdown, 2024 ranked as the sixth strongest year on record for new leasing activity. Notable markets included the Inland Empire and Dallas/Fort Worth, which saw 46 million square feet and 45.5 million square feet of leasing activity, respectively.
“We’ve seen growing interest from companies seeking larger buildings to support omnichannel fulfillment strategies,” said Jason Tolliver, President of Logistics & Industrial Services for Cushman & Wakefield, in a statement. “This approach enhances efficiency and customer satisfaction by aligning with e-commerce, wholesale, and retail demands. Forward-deployed stock models are also gaining traction, ensuring quicker delivery times and improved customer experiences.”
Construction and deliveries
New construction deliveries slowed for the second consecutive quarter, with 85.3 million square feet completed in the fourth quarter, a drop of 8% quarter-over-quarter and 48% compared to the previous year.
Of the annual total of 425.5 million square feet, 22% of delivered buildings were build-to-suit projects and 78% were speculative developments.
The South and West regions dominated completions, accounting for 50% and 29% of the year’s total, respectively. However, only four markets exceeded 20 million square feet of completions in 2024, compared to 10 markets in 2023.
The construction pipeline has thinned significantly, with projects under development falling by 36% year-over-year to 290.5 million square feet, the lowest level since the third quarter of 2018. One-third of this total comprises BTS developments, which are expected to help stabilize vacancy rates in the latter half of 2025.
Rent fluctuations
Asking rents increased by 1% in the fourth quarter, reaching $10.13 per square foot. For the year, rents rose by 4.5%, driven by growth in the South (6%) and Northeast (3.8%). Conversely, the West region experienced a 2.3% decline in rents.
Markets such as Raleigh/Durham (-14%), Inland Empire (-14%), and Los Angeles (-13%) saw the steepest decreases, while 69% of markets reported annual rent increases. Of these, 21 markets—primarily in the South—posted gains of 5% or more.
A shift toward growth
After a year of cautious decision-making, the logistics sector appears poised for renewed growth. Tolliver said that companies are investing in optimizing supply chains and diversifying networks to mitigate risks.
“What’s particularly encouraging is the proactive stance of retailers, wholesalers, and 3PLs, who are shaping the market rather than merely reacting to it,” Tolliver said in a statement. “2025 will be a year defined by this strategic bias for action.”
