With vacancy rates rising for eight consecutive quarters, the U.S. industrial market is experiencing a shift in favor of tenants. This trend is expected to continue for another 12 to 18 months before property owners can regain the leverage needed to increase rents more aggressively. A peak in vacancy rates, close to the 20-year average of 7%, is anticipated by mid-2025.
National industrial real estate trends
- Quarterly net supply additions are on pace to fall below the pre-pandemic three-year average in early 2025 and continue declining, hitting a 10-year low by the end of the year.
- The volume of project completions will remain elevated through late 2024 but has already begun to decline and will likely hit 10-year lows by late 2025.
- Industrial sales topped $40 billion in the first nine months of the year, a 1% increase from the 2015–2019 average.
- Year-over-year industrial rent growth has decelerated significantly over the past 24 months to 2.9%, a rate which is below the pre-pandemic five-year average.
- Rent growth is expected to slow to its lowest rate since 2012 due to high vacancy rates but may reaccelerate in late 2024.
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Information contained in this report is provided, in part, from third-party sources, including the U.S. Bureau of Labor Statistics, the Bureau of Economic Analysis, Engineering News-Record, and CoStar Group. Even though obtained from sources deemed reliable, no warranty or representation, expressed or implied, is made as to the accuracy of the information herein.
