- Industrial absorption is setting records, quarter after quarter.
- Vacancy continues to fall, while rents are increasing.
- A record amount of development is underway across the country. Dallas-Fort Worth accounts for roughly 10% of it.
- Fifty-four markets have absorption topping one million square feet year-to-date.
- Austin, Las Vegas, Salt Lake City, and Savannah have posted the fastest industrial growth in the country.
The U.S. industrial sector continues its unwavering growth trajectory, setting records for the third consecutive quarter. Following an outstanding second quarter for both occupancy gains and construction, third quarter statistics exceeded expectations — by a long shot.
E-commerce growth continues to be a driving factor for industrial expansion, and holiday spending is sure to contribute to its exponential growth. Total retail sales are projected to grow between 7% and 10% at the end of 2021, with e-commerce 18.4% of sales. This growth should continue to encourage demand for warehouse distribution space, especially near already-tight port markets.
Overall net absorption totaled 413.3 million square feet year-to-date, with 175.7 million square feet of occupancy gains in the third quarter alone. These record-setting totals are already 51.1% higher than the 2020 year-end total of 273.5 million square feet.
Year-to-date new supply of 107.5 million square feet is 17.4% higher than the 91.6 million square feet recorded at this time last year. Year-end deliveries are also expected to increase, since the industrial construction pipeline remains remarkably active. The more than 477 million square feet underway is approximately 41% more than the total under construction one year ago. The Chicago industrial market delivered the most product during the third quarter, eight build-to-suit projects totaling a massive 11.2 million square feet, while the Dallas-Fort Worth market is the top market for product under development, with 47.6 million square feet underway.
Fifty-four markets posted year-to-date occupancy gains greater than one million square feet at the end of the third quarter, led by Dallas, Chicago, Atlanta, Inland Empire, and Houston. On the other hand, just three industrial markets reported negative absorption — Huntsville, Eastern Idaho, and Hartford. Those with the highest absorption as a percent of inventory include emerging markets such as Austin, Las Vegas, Salt Lake City, and Savannah. Demand for logistics and distribution space, primarily fueled by e-commerce occupiers, supports the strong growth in these cities.