In the third quarter of 2024, the U.S. industrial vacancy rate climbed by 19 basis points to 6.6%, according to a report from Colliers. This is the smallest quarterly increase since it began to rise in late 2022.
Vacancy has increased across the country. Year-over-year the increase was the largest in the West, by 256 basis points. The Midwest was up 57 basis points and the South increased 7.8%.
New supply totaled 76 million SF, the lowest since early 2021 and 54% below the 163 million SF delivered this time last year.
Demand as measured by absorption totaled 39 SF nationally in Q3, bringing the year-to-date tally to 115 million SF. This is 36% below the 180 SF recorded during the first three quarters of 2023.
Nineteen of the 77 markets recorded positive net absorption greater than 1 million SF between July and September. And 26 markets saw net absorption turn negative during the quarter.
The report notes that the recent uptick in new leasing volume will result in a bump in demand during Q4 as tenants take occupancy.
Quarterly construction completions will fall further over the next few quarters. After peaking at 711 million SF during Q4 of 2022, the total space under construction has dropped by 53% to 331 million SF.
Over the next two quarters it's expected to fall below 300 million SF. This level is in line with the pace of development pre-pandemic.
Rent growth, which peaked in 2023 with a 20% increase, continued this trend by increased 8% year-over-year in Q3.
Weighted warehouse/distribution rents average $10. 26 per SF, up 6% since 2020.
Over the past year, rents decreased in 27 markets, while 19% grew 10% or more, year-over-year.
