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February 21, 2024
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U.S. Industrial Market Posts 100 msf Positive Net Absorption for 3rd Qtr 2021


This report provided by real estate services firm Transwestern

The U.S. industrial market continues to prosper during the pandemic, posting 102.2 msf of positive net absorption for the third consecutive quarter, according to Transwestern’s second quarter U.S. industrial market report. Markets leading net absorption both in the second quarter and year over year include Atlanta, Chicago, Dallas-Fort Worth and the Inland Empire.

Additionally, the national vacancy rate dropped to 5.2%, its lowest level since the start of the pandemic, helping to drive average rent up to $6.96 per square foot. At midyear, seven out of 44 markets saw vacancy below 4%, including Greensboro, Inland Empire, Los Angeles, Nashville, New Jersey, Orange County (California), Raleigh-Durham and San Jose-Silicon Valley.

“The industrial sector is once again firing on all cylinders, making it increasingly difficult to find suitable space in prime industrial markets,” said Matt Dolly, Research Director at Transwestern. “High rents and supply chain issues are making secondary logistics markets increasingly attractive to occupiers and investors, and we’re closely following markets such as Savannah, Las Vegas, Charleston, Phoenix and San Antonio, all of which have experienced expansionary conditions over a three-year period.”

While new inventory delivered to the market during the second quarter was at its lowest level in more than two years, the 573.7 msf currently under construction is 30% higher year over year and double that of year-end 2015. Dallas-Fort Worth, Inland Empire, Atlanta, Phoenix, Chicago and Philadelphia all have more than 20 msf underway.

The second quarter saw a slight decrease in the unemployment rate, down to 5.9%, as employers added 1.6 million jobs. However, industrial-using employment was virtually unscathed as supply chain challenges adversely affected manufacturing and construction.

Dolly said, “E-commerce’s share of overall retail sales growth cooled in the second quarter due to the reopening of brick-and-mortar stores, but we expect retailers and food and beverage companies to continue investing in e-commerce, further fueling industrial demand.”

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