Rise in Construction Completions Increases Industrial Vacancy Rate

Executive Summary

• Construction completions totaling 168 million sq. ft.—64% of it vacant—pushed up the overall industrial vacancy rate by 50 basis points (bps) to 4.2% in Q3.
• Construction starts fell by 37% quarter-over-quarter and 64% year-over-year to 40 million sq. ft. in Q3, lowering the under-construction total for the third consecutive quarter to 479 million sq. ft.
• Sublease availability climbed to 160.6 million sq. ft., the highest amount since the Global Financial Crisis, but accounted for less than 1% of total industrial inventory.
• Year-to-date leasing activity fell by 12.4% from the same period last year to 590.6 million sq. ft. Renewals made up more than one-third of total activity.
• Net absorption of 55.8 million sq. ft. in Q3 brought the year-to-date total to 200.7 million sq. ft.—down from the 380.8 million sq. ft. absorbed this time last year.
• Average asking rent rose by 2.0% quarter-over-quarter and 9.1% year-over-year to a record $10.16 per sq. ft. Average taking rent increased by 1.6% quarter-over-quarter and 15.4% year-over-year.