United States Industrial Outlook | Q3 2022

Despite a loss of momentum in the macroeconomic environment, industrial market fundamentals remained sound as the third quarter of 2022 came to an end. The strong leasing momentum witnessed in 2021 led to tenants taking occupancy this quarter and absorbing nearly 123 million s.f. of industrial space. Leasing activity fell slightly quarter-over-quarter, but the market showed signs of resiliency with approximately 134.3 million s.f. of deals signed in Q3. Overall, industrial markets continued to constrict, posting the seventh consecutive quarter of declining vacancy, bringing the rate to 3.3%, an all-time low. As vacancy rates continue to shrink, development figures are currently in line with demand. There is currently 633.8 million s.f. under construction, an uptick from the previous quarter. Amid economic uncertainty and rising inflation, pre-leasing rates are not as strong as last year, but pre-leasing activity is still happening. In Q3 138.2 million s.f. of new industrial product delivered to the market marking a nearly 27% increase from the previous quarter.

Market performance categories

• Leasing: While leasing activity slipped slightly quarter-over-quarter, the market showed signs of resiliency with approximately 134.3 million s.f. of deals signed in Q3.

• Rental Rates: The historical low vacancy rate helped contributed to lofty rents of $8.45 p.s.f. marking a 25% year-over-year increase.

• Net Absorption: The strong leasing momentum witnessed in 2021, led to tenants taking occupancy this quarter and absorbing nearly 123 million s.f. of industrial space, bringing the year-to-date absorption total to 356.9 million s. f.

• Vacancy: Overall, industrial markets continued to constrict, posting the seventh consecutive quarter of declining vacancy, bringing the vacancy rate to 3.3%, an all-time low.

• Under Construction: Q3 saw record amounts of ground breakings, bringing the total amount of industrial product under construction to 633.8 million s.f