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U.S. industrial market statistics, trends, & outlook

Positive momentum continues as the U.S. industrial markets cross the mid-year mark

Leasing sentiment remains optimistic for the second half of 2018. The industrial market has seen positive rent growth and while the Class A market remains hot, there is increased competition between the Class B and Class C product in the market, which should keep most U.S. markets favoring landlords throughout the course of the year.

The U.S. under construction pipeline expanded by 3.7 percent from the previous quarter at 239.1 million square feet. Despite a robust development pipeline, strong pre-leasing activity has helped keep the vacancy levels stable.

The second quarter saw strong growth in net absorption and new deliveries and nearly 6.0 percent annual growth in rents—maintaining the positive momentum seen at the start of the year. The U.S. vacancy remained stable quarter-over-quarter at 4.8 percent and continues to be at an all-time historic low.

Here are three things to keep an eye on in the coming months:

U.S. annualized rent growth continues to trend upward: Spurred by an increase in absorption of warehouse space, rents inched up further, reaching $5.68 p.s.f., with an annualized growth rate of 6.2%.

Top logistics markets see more deliveries or higher percent spec since this time last year: The top industrial markets of Dallas, Inland Empire, Eastern & Central Pennsylvania, and Atlanta combines made up nearly one-third of the U.S. total construction pipeline.

Four industries have topped leasing activity over the past three years, most of which is logistics related: Each year, the top three industries (logistics, 3PL, and retail) accounted for over a third of total leasing activity.

Click through the tabs below to compare market performance across key categories.

Inventory (s.f.)

Total inventory tops 12.5 b.s.f. led by Chicago, Los Angeles and Philadelphia/Harrisburg.

Market Inventory (s.f.)
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Rental rates ($)

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.

Market Rental rates ($)
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YTD net absorption (s.f.)

Annual net absorption grew 11.9% to 58.4 m.s.f. Philadelphia, Dallas and Atlanta led absorption, contributing 34% alone.

Market YTD net absorption (s.f.)
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Total vacancy (%)

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%).

Market Total vacancy (%)
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Under construction (s.f.)

206.7 m.s.f. is currently under construction, and an estimated 247.2 m.s.f. is expected to deliver through year end.

Market Under construction (s.f.)
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United States industrial property clock

JLL Industrial Outlook clock (image)

Source: JLL

     

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