Tampabay / May 20, 2024
U.S. National Market Report | Q1 2024
The U.S. industrial sector continues to cool off after two years of unprecedented growth coming out of the pandemic. Tenant demand slowed in the first quarter of 2024 but remains positive. Check out the full report below presented by Cushman and Wakefield.
Highlights:
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- Industrial Supply
- Vacancy Rate |5.8% : The overall vacancy rate climbed another 60 basis
points (bps) to 5.8% as new speculative supply pushed the rate higher for the fifth straight quarter. Although the vacancy rate is elevated compared to the previous three years, it is still 120 bps below the 10-year pre-pandemic average of 7%. - Under Construction |404.7M : The under-construction pipeline has declined by 10% since the end of 2023 and is down 40% YOY as developers have pulled back on starts, especially speculative developments amid the backdrop of slowing demand for space and higher interest rates.
- Vacancy Rate |5.8% : The overall vacancy rate climbed another 60 basis
- Industrial Demand
- Net Absorption |13.8M : Tenant demand slowed in the first quarter, down from 48 msf observed in the prior quarter and from the 77 msf recorded one year ago. Eight markets posted more than 1 msf of quarterly net occupancy gains in Q1 2024. Markets which have seen healthy new supply totals with tenants in place propelled absorption, such as Houston (5.1 msf), Savannah (3.6 msf), Chicago (2.8 msf) and Austin (2.4 msf). Of the 83 U.S.
- Market Pricing
- Asking Rent | $9.73 PSF : The U.S. average asking rental rate was
flat QOQ at $9.73 per square foot (psf) and the annual growth rate decelerated to 6%. The Northeast region finished the quarter with the highest rates ($13.65 psf) in the U.S. asking rents in the Northeast were up 9.2% YOY, the highest annual growth rate of any region. Some of the markets which recorded the sharpest growth in the previous three years have seen modest declines since early 2023 as the market rebalances.
- Asking Rent | $9.73 PSF : The U.S. average asking rental rate was
- Outlook
- Despite a weaker Q1, demand for industrial space is expected to come within the 100-150 msf range in 2024—significantly slower than 232 msf observed in 2023, but still positive.
• Expect supply to outstrip demand in 2024, causing vacancy to peak below 7%. Rent growth will also continue to decelerate in 2024, hovering in the 2-5% range.
• Touring activity by tenants has ticked higher over the last few months, which should help keep leasing activity healthy and above pre-pandemic averages.
• With the future construction pipeline quickly thinning, the stage is set for vacancy to inflect in 2025 and begin trending lower from there. Rents will grow moderately at first before picking up the pace in 2026.
- Despite a weaker Q1, demand for industrial space is expected to come within the 100-150 msf range in 2024—significantly slower than 232 msf observed in 2023, but still positive.
- 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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