H1 2022 Sets Record for 1 Million-Sq.-Ft. Industrial Leases

A record 37 signings for 1 million sq. ft. or more were among the top 100 industrial leasing transactions in H1 2022, up from 24 at the same time last year. The H1 top 100 had an average size of 931,860 sq. ft., compared with 800,149 in H1 2021. Just 15 of the top 100 leases were renewals, a sign that tenants generally are expanding their space.

Traditional retailers/wholesalers were most active, accounting for 40 of the top 100, followed by third-party logistics (3PL) operators with 30—seven of which were for 1 million sq. ft. or more, compared with none in H1 2021. E-commerce companies took 12 of the top 100, down from 27 last year.

Figure 1: Industry Share of Top 100 U.S. Industrial Leases in H1 2022

Source CBRE Research, H1 2022.

Atlanta led all markets with 12 of the top 100, five of which were for 1 million sq. ft. or more, followed by Chicago with 11 of the top 100. Savannah was the top emerging market with seven of the top 100, up from two a year ago. Continued demand for mega distribution centers is expected in the second half of 2022. A large increase in construction from a year ago will fuel more leasing activity, particularly in markets with the highest rates of speculative development like Dallas-Fort Worth, Atlanta, Chicago, Phoenix and Indianapolis.

Figure 2: Leading Markets for Top 100 Lease Transactions in H1 2022

Source CBRE Research, H1 2022.

Overall U.S. industrial fundamentals remained solid in H1 2022, with a record low vacancy rate and record high rent growth. Leasing activity for all size ranges totaled 454 million sq. ft., down by 5.4% from a year ago but 44% higher than in H1 2020. The slight year-over-year decline was a result of a 21.1% drop in demand for light-industrial space (under 25,000 sq. ft.). Leases for 700,000 sq. ft. or more increased by 24.6%.