Figures

Historic-Low Vacancy Leads to Record-High Rents

U.S. Industrial & Logistics | Q3 2021

28 Oct 2021 1 Minute Read

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Executive Summary

  • The U.S. industrial market continues to thrive with record-high asking rents driven by historically low vacancy amid robust demand for space. Although the development pipeline is the highest it’s been, demand continues to outpace supply.
  • Occupiers are leasing space at unprecedented levels to handle the large increase in inventory requirements given strong consumer demand. The need to keep more “safety stock” onshore amid supply chain volatility has spurred additional demand for warehouse space.
  • Net absorption totaled 120.3 million sq. ft. in Q3, bringing the year-to-date total to 291.9 million sq. ft.—135% more than in the same period last year.
  • Despite materials shortages and rising costs, construction deliveries rose by 36.1% quarter-over-quarter to 79.3 million sq. ft.
  • Developers appear willing to absorb higher construction costs as under-construction activity remains elevated at 448.9 million sq. ft.
  • Atlanta, Dallas/Ft. Worth and Phoenix have the largest under-construction volumes, totaling a combined 94.0 million sq. ft. as of Q3.
  • Demand outstripped new supply by 41 million sq. ft., driving the vacancy rate down to a record-low 3.6%.
  • Average asking rent increased by 3.1% quarter-over-quarter and 10.4% year-over-year to a record $8.92 per sq. ft.