Industrial Market Remained Relatively Stable Prior to Imposition of Tariffs

Executive Summary

• The U.S. industrial market recorded solid leasing activity, a small increase in overall vacancy and modestly positive net absorption in Q1.
• The overall vacancy rate rose by 20 basis points to 6.3%, the highest since Q2 2014. This was fueled by negative absorption in 20 of the 60 markets tracked by CBRE.
• Despite solid leasing activity, net absorption was relatively low at 23.3 million sq. ft. as a growing number of occupiers consolidated out of older facilities.
• Construction completions fell to their lowest quarterly level since Q2 2018 at 64.6 million sq. ft. Plummeting construction starts will lead to fewer completions in coming quarters.
• Many occupiers are taking a wait-and-see approach before making real estate decisions. The imposition of widespread tariffs on imports likely will have a significant impact on market activity, especially if increased costs are passed on to consumers.