The U.S. industrial market performance continues to downshift heading into 2024. The national vacancy rate is not expected to rise above its 20-year average of 7.3%. Net absorption has remained positive but continued to lose steam, with the second half of 2023 registering the lowest third- and fourth-quarter absorption tallies in 13 years.
One silver lining is that very early signs of stabilization and eventual recovery in tenant demand are already emerging. In addition, an oncoming new supply of industrial buildings is predicted to pacify tenant demand throughout 2023.
National industrial real estate trends
- The national vacancy rate is expected to remain below its 20-year average of 7.3%.
- The pace of individual transactions decelerated visibly as trailing 12-month closings fell 36% compared to the same period in 2022.
- The stock of U.S. industrial properties is now growing at the fastest pace in more than three decades. Over the past 12 months, the total stock of U.S. industrial space has grown by 2.8%, almost triple the pre-pandemic 20-year average for annual supply growth.
- Across the entire United States, there is about 1.7 billion square feet (SF) of industrial space listed as available for lease among existing properties and 500 million SF of unleased space currently under construction.
- Risks of oversupply are most heavily concentrated among properties 500,000 SF or larger.
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