Tampabay / October 18, 2023
U.S Industrial Market Report | Q3 2023
Industrial Fundamentals Soften Amid Record New Supply. Check out the full report below presented by Cushman and Wakefield.
- Industrial Supply
- Vacancy Rate |4.7% : The record new supply coming online coupled with moderating demand and occupiers right sizing their footprints have led to another rise in vacancy for the U.S. industrial market.
- Under Construction |537.6 MSF : The third quarter of 2023 yielded the highest amount of new industrial construction delivered on record at 171.8 million square feet. There have now been 451.8 MSF of new facilities built since the start of the year. However, amid the robust volume of new deliveries, the national under-construction pipeline shrunk to 537.6 MSF, the smallest pipeline since the second quarter 2021.
- Industrial Demand
- Net Absorption | 46.2 million : Net growth is still occurring, despite absorption totals continuing to moderate; the 46.2 MSF of overall net absorption registered in 3Q was 12.7% lower than what was registered during the previous quarter. Overall, demand for industrial space across the U.S. has clearly downshifted in 2023—partly due to the fact that the goods boom that occurred during the pandemic is winding down, and partly because businesses are anticipating slower economic conditions ahead.
- Market Pricing
- Asking Rent | $9.73 PSF : Amid cooling demand, YOY rent
growth slowed for the fourth straight quarter, but the South region posted an 11.1% increase during that time. The additional new speculative supply, priced well above the market average, has continued to exert upward pressure on the average rental rates in markets where healthy delivery totals have occurred.
- Overall vacancy is expected to rise above 5% in 2024, but will still sit well below the 15-year average of 6.8%. However, once new
supply delivers and the pipeline shrinks to levels seen during the pre-pandemic expansion cycle, some markets will quickly emerge as supply-constrained, and rent growth could very well reaccelerate.
- Cooling leasing activity amid the current economic environment will temper net absorption for the remainder of 2023 and 2024.
- Asking rent growth will continue to moderate. The wave of supply, however, will likely be largely absorbed by the end of 2025 which sets the stage for rent growth to reaccelerate.
Download the full report here
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Have questions about the report or looking for more information about the industrial market in Tampa Bay? Please reach out to the team!
John Jackson, SIOR, CCIM. | Managing Director
+1 813 424 3202 | John.Jackson@cushwake.com
JT Faircloth | Director
+1 813 833 3242 | Jt.Faircloth@cushwake.com
Casey Perry | Associate
+1 813 233 6464 | Casey.Perry@cushwake.com