Industrial Real Estate Maintains Strength in 2022

Executive Summary

• The U.S. industrial market had record rent and supply growth in 2022, as well as the second highest annual total of net absorption.
• Supply chain resiliency was the main driver of demand for industrial real estate as companies tapped multiple ports of entry, used more onshore manufacturing and hired third-party logistics providers to lower supply chain costs and protect against import disruptions.
• Construction completions totaled 134.5 million sq. ft. in Q4—the highest quarterly total on record. For the year, completions increased by 24% to 446 million sq. ft., 73% of which was occupied by year-end.
• Net absorption increased by 2% quarter-over-quarter to 111.4 million sq. ft. Annual net absorption of 506.3 million sq. ft. was the second most ever, 27% lower than 2021’s record total.
• Average asking rent rose by 3% quarter-over-quarter and 13% year-over-year to a record $9.63 per sq. ft. Taking rent was up by 6% quarter-over-quarter and 18% year-over-year.
• Lower inflation, a resilient job market and solid retail sales, combined with occupiers’ needs for supply chain resiliency and modern warehouse space for automation, should keep demand strong in 2023.