United States Industrial Outlook – Q1 2021
Third quarter sets the stage for a strong market going into the final quarter of 2020
Shifts in the way people live, work and shop in a post pandemic world have forever impacted the industrial real estate sector. This quarter demand from the e-commerce industry started to level off while pressure on supply chain and logistic solutions fueled demand in the Logistics & Distribution industry. Net absorption continued to climb this quarter with 85.6 million s.f. of industrial space becoming occupied in Q1 2021. As the move into a post pandemic world takes shape, and more tenants move into their spaces, 2021 net absorption has the potential to surpass 2020 by a landslide. Other trends on the horizon include the rising number of items that need to be kept in cold storage that is pushing demand in the Food & Beverage industry, as well as the idea of repositioning existing assets to address the limited availability of land and rising steel prices.
Market performance categories:
Leasing: Leasing momentum and demand for industrial space continues to forge ahead. This quarter alone, over 121.5 million s.f. of industrial product was leased.
Rental Rates: The U.S. industrial rents increased $0.09 to $6.39 per square foot. Since Q1 2020, rents have increased 4.2 percent.
Net Absorption: Net absorption was the second highest on record, totaling 85.6 million s.f.
Vacancy: Following a year of fluctuating vacancies, the overall industrial rate is starting to steadily decrease down to 5.2%
Under Construction: The industrial market remains strong with 55.8 million s.f. delivered this quarter. The construction pipeline has 333.5 million s.f. of industrial product under construction with nearly half of it already pre-leased.