No Signs of Slowing
Demand Growing Stronger
U.S. industrial markets absorbed 64.1 million square feet (msf) in the second quarter of 2018, up 4.9% from the same period a year ago, and propelled year-to date absorption to 126 msf. Demand during the second quarter continued to be impressive and broad-based. Leasing velocity accelerated in nearly half of the U.S. during the second quarter, with 29 markets posting over 1 msf of absorption through the first half of 2018 as occupiers further expanded their footprints. Every industrial segment remained in growth mode. Through midyear, logistics-related warehousing posted 113 msf of net occupancy gains, manufacturing registered 7.2 msf and flex space recorded 3.7 msf. Every U.S. region performed well during the quarter, with the South and the West leading absorption gains and the Midwest posting the greatest year-over-year improvement. Markets where demand was strongest include Inland Empire (13.3 msf), Dallas/Fort Worth (11.7 msf) and Chicago (9.8 msf). Given its performance in the first half of 2018, U.S. industrial net absorption is on pace to eclipse the net occupancy gains in 2017 and rank among the top five years on record
- Net absorption will surpass 240 msf in 2018 for a third year in a row, and eclipse 200 msf in 2019 for a sixth consecutive year.
- Supply will modestly outpace demand with overall industrial vacancy rate remaining in the low-to-mid 5% range through 2018/19
- Rent growth will remain strong in 2018 and gradually beginning to decelerate in 2019.