United States Industrial Outlook | Q4 2022
2022 finished as a successful year for industrial assets
The U.S. industrial market closed 2022 with 467.9 million s.f. of net absorption across the country, the second highest on record. The Dallas/Fort Worth, Atlanta and Chicago markets were responsible for nearly a quarter of the 98 million s.f. of absorption in Q4. Just over 9 million s.f. of vacant sublease space has come online throughout 2022 bringing the year-end total to 33.2 million s.f. However, this amount is negligible in the grand scheme of things as it only accounts for 0.2% of all vacant space.
Market performance categories
Leasing: Demand was very active with over 115.7 million s.f. leased this quarter in a variety of different industry sectors. While e-commerce has accounted for a high percentage of industrial leasing over the last two years, we are starting to see demand diversify amongst other industries such as Logistics & Distribution, 3PL, Construction Materials & Building Fixtures, Traditional Retailers, and Food & Beverage.
Rental Rates: 2022 closed with an average asking rate of $8.80 p.s.f marking a 19.2% year-over-year increase.
Net Absorption: While the nearly 100 million s.f. of net absorption in Q4 appears healthy, it is important to note that part of this figure can be attributed to the delivery of new projects which were pre-leased at the time of delivery.
Vacancy: As expected, the nearly record-breaking sum of new deliveries attributed to the vacancy rate increasing by 10 basis points quarter-over-quarter to 3.4%.
Under Construction: The 632.3 million s.f. currently under construction is still a record-breaking figure but is largely unchanged from the previous quarter indicating a slowdown in new ground breakings. Furthermore, speculative developments account for 84.4% of assets currently under construction.