High Demand for Industrial Space Continues in Q1
- The U.S. industrial market shows no signs of slowing down with record-high asking rents and in-process development activity, low vacancy levels and 44 consecutive quarters of positive net absorption.
- Companies are leasing space at a historically robust pace to accommodate the large increase in e-commerce sales. Nearly 100 million sq. ft. was absorbed in Q1, the third highest mark on record. This was on the heels of a record 116 million sq. ft. of net absorption in the previous quarter.
- Despite strong demand, construction completions dropped in Q1 to 58.2 million sq. ft., the lowest amount since Q2 2019. However, a record 376 million sq. ft. is currently under construction.
- Positive fundamentals and a drop in completions lowered the overall availability rate by 30 basis points (bps) to 7.0%, the lowest since Q1 2019.
- Asking rents rose in Q1 to a record $8.44 per sq. ft., 2.2% higher than in Q4 and 7.1% higher than a year ago.
- Increased demand from e-commerce and the need for safety stock to guard against supply chain disruptions will further push up asking rents and keep vacancy rates near record lows despite a large supply of new development coming on stream.