The industrial construction boom occurred between late 2020 and 2022, driven by a high demand for warehouse and logistics space. However, as interest rates increased and geopolitical factors came into play, demand decreased leading to a decline in both construction and absorption from 2023 onward. Recent reports suggest that the market may have reached its lowest point or is close to it.
Despite facing challenges such as high interest rates, inflation, labor disputes, and election uncertainties throughout the year of 2024, the U.S. industrial market showed resilience with modest growth persisting according to Cushman & Wakefield’s MarketBeat Industrial Report.
On the other hand,”the industrial sector ended 2024 with tenants being cautious about making significant commitments due to ongoing uncertainties in the market,” stated JLL’s United States Industrial Market Dynamics report.
CBRE’s U.S. Industrial Report revealed that annual absorption hit its lowest level in years while construction completions also significantly dropped.”Both asking rents and taking rents declined for three consecutive quarters as landlords focused on occupancy,” said CBRE analysts.
Meanwhile,Colliers’ U.S.Industrial Market Statistics Report noted that vacancy rates are nearing their peak as construction activity returns back to pre-pandemic levels while demand gradually recovers.”
JLL analysts pointed out economic uncertainties along with an increase in deliveries,a shift towards smaller lease sizes,and less speculative constructions contributedto these sluggish metrics.Cushman & Wakefield analysts agreed,statingthathighinterestrates,inflation,labor disputes,and electionuncertainties played a rolein slowing down absorption rate
