United States Industrial Outlook | Q3 2017
After a somewhat slower second quarter, the third quarter brought momentum back to the U.S. industrial market. Both supply and demand indicators, new completions and net absorption exceeded midyear levels.
Of the tier 1 markets, Baltimore, Atlanta and Inland Empire were especially strong. Each saw total net absorption as a percent of total stock exceed 2.5 percent. Overall, in more than half of the industrial markets we track, the year-to-date total net absorption exceeded total new deliveries, showing stable demand levels as new product is delivered.
Spurred by an increase in warehouse and logistics absorption and persistently low market vacancy, U.S. industrial rents rose in Q3, reaching $5.40 per square foot, an all-time high.
Year-to-date, the U.S. has absorbed nearly 165.6 m.s.f., and over the same time period has delivered 161.0 m.s.f. of new industrial product —a clear sign as demand continues to outpace new supply.
In Q3, nearly 25.0 percent of total U.S. leasing demand came from e-commerce companies expanding their footprints in markets where they already had a presence.
Not in the near term. In recent years, a focus on supply chain productivity has spurred growth in hot sectors like e-commerce, 3PLs and logistics & distribution, which has in turn helped in increasing demand for new, modern industrial space.
Total inventory tops 12.5 b.s.f. led by Chicago, Los Angeles and Philadelphia/Harrisburg.
U.S. average asking rents jumped to $5.25 per square foot. Northern New Jersey saw the highest year-over-year rent growth, followed by San Francisco Mid-Peninsula, Seattle and Inland Empire.
Annual net absorption grew 11.9% to 58.4 m.s.f. Philadelphia, Dallas and Atlanta led absorption, contributing 34% to the U.S. total alone.
Vacancy rates fell in nearly three-quarters of U.S. markets, dropping overall U.S. vacancy to 5.3%. California continues to have the tightest markets in the country, led by Los Angeles (0.9%), East Bay (1.2%) and Orange County (1.5%).
206.7 m.s.f. is currently under construction, and an estimated 247.2 m.s.f. is expected to deliver through year end.
View interactive version with additional market details.
Managing Director, Industrial & Logistics Research
Vice President, Americas Industrial Research
Manager, Americas Industrial Research