U.S. Industrial Demand Remains Healthy, but Below Last Year’s Pace

by | 21 November 2019

Our latest research report — Q3 2019 Industrial Market Outlook — presents the key trends and statistics for the U.S. industrial market. U.S. industrial property fundamentals remain very healthy with record high asking rents and product under construction, however year-to-date overall net absorption is well below last year’s pace. Occupancy gains for the year are 167.4 million square feet, more than 18% lower than the same time a year ago. A variety of factors have contributed to the drop in overall net absorption, including a lack of new inventory in emerging secondary markets and a pick-up in renewals, as occupiers wait to see how trade disputes and a possible economic slowdown impacts retail sales.

Featured Highlights

  • With vacancies near record lows, net absorption volumes increasingly rely on new construction.
  • Occupancy gains remain down for the year but are still at a healthy level.
  • While continued positive net absorption is welcome news, the fact that 2019 net absorption remains well below 2018’s pace signifies that we are past the peak of this cycle.
  • Economic fundamentals through the first 10 months of 2019 are solid with continued job growth, a near historical low unemployment, improved consumer sentiment and low Consumer Price Index (CPI) growth despite tariffs.
  • Transaction volume for industrial space will remain solid because of projected stable economic fundamentals and the continued need for modern industrial space.
  • Population growth will keep occupiers in all industries looking at space in the Southern and Western portions of the U.S., while improvements and expansions of inland and coastal logistics hubs in the Northeast and Midwest will keep demand strong in these regions for the foreseeable future.

For more details on the latest office trends, download the U.S. Industrial Market Outlook. Be sure to also explore the Q3 2019 update to Your Market Insights Hub | U.S. Industrial, which presents the latest data and forecasts in a detailed, interactive format – including a new metro map feature.