Tampabay / February 9, 2024
U.S Industrial Market Report | Q4 2023
2023 ended with absorption totals and vacancy rates back at pre-pandemic
levels. High interest rates, normalizing demand and record-setting construction delivery totals all contributed to markets rebalancing after two record years. Check out the full report below presented by Cushman and Wakefield.
Highlights:
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- Industrial Supply
- Vacancy Rate |5.2% : This marks the first time the rate surpassed 5% since the third quarter of 2020. However, occupancy remains tight, as the vacancy rate resides lower than the 10-year pre-pandemic historical average of 7%.
- Under Construction |452.6 MSF : Quarterly construction deliveries kept a feverish pace, as the fourth quarter in 2023 marked the second-highest quarterly total on record. However, new supply will start to subside in 2024, as the pullback in construction starts constricts future development due to general uncertainty about the economy, the difficult lending environment and the ongoing slowdown in demand.
- Industrial Demand
- Net Absorption | 41.1 million : This pushed the annual total to 224.3 msf, on par with the 10-year pre-pandemic (2010-2019) average of 224.8 msf. Absorption is anticipated to moderate further in 2024 but remain positive. Almost all the positive absorption recorded across the country was fueled by newly delivered, pre-leased industrial facilities. The South region propelled absorption, accounting for 58.5% of the 2023 figure.
- Market Pricing
- Asking Rent | $9.79 PSF : As market conditions soften amid rising vacancy rates and normalizing leasing totals, asking rents inched higher, to $9.79 per square foot (psf), a slowing from previous quarters. On an annual basis, rental rate growth reached 10% at year-end 2023. Most markets expect to see growth decelerate further in 2024.
- Outlook
- Look for vacancy to inch up further, as the construction pipeline continues to deliver new product, while demand moderates further.
- Net absorption is expected to remain tempered in 2024, as cooler consumer demand for goods, persisting elevated interest rates and sticky inflation hamper growth.
- More sustainable rent growth will occur in 2024, as vacancy ticks higher and markets rebalance, though many markets will remain well below long-term historical averages.
- As a wave of industrial product delivers over the next 12 months, the pipeline will shrink further, leading some markets to become supply constrained in 2025 as absorption starts to regain momentum.
- Industrial Supply
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View Cushman and Wakefield’s Historical Reports
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
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