Record New Supply Drives Up Vacancy

Executive Summary

• The U.S. industrial market added 89 million sq. ft. of vacant supply in Q1, the largest quarter-over-quarter increase on record. As a result, the overall vacancy rate increased for the first time since Q2 2009, up by 50 basis points (bps) quarter-over-quarter to 3.5% but well below the 10-year average of 5.0%.
• Total quarterly construction completions were the second highest on record at 144.1 million sq. ft., only 43% of which was occupied at quarter-end. This was much lower than the 73% occupancy rate for quarterly completions in 2022.
• Under-construction projects declined for the first time in more than four years to 620 million sq. ft., down by 7% from Q4 2022 and just under 25% preleased.
• Leasing activity fell by 22% year-over-year to just over 174 million sq. ft. but was 16 million sq. ft. more than in Q4 2022.
• Net absorption of 54.2 million sq. ft.—the lowest amount since Q2 2020—marked the 52nd consecutive quarter of positive demand.
• Average asking rent rose by 3% quarter-over-quarter and 11% year-over-year to a record $9.91 per sq. ft. Taking rent increased by 17.7% year-over-year.