The second quarter was another strong period for industrial real estate in the United States, driven by the ongoing rise of e-commerce pushing the need for logistics space to new heights, according to CBRE.
Companies are leasing properties at unprecedented levels to keep up with the growth of online sales, helping push net absorption of industrial space to 84.8 million square feet during the second quarter. That figure moved total net absorption through the first six months of the year to 153.8 million square feet — more than double the midyear total of last year and up by 70.4% from the first half of 2019. In fact, it’s the highest midyear level since 2016, per CBRE’s data.
And with no weakness in e-retail sales in sight, demand looks to continue fiercely for the foreseeable future. Meanwhile, hindered by elevated costs and long wait times for building materials, construction has suffered; industrial completions sank to 51.7 million square feet from April through June, the lowest quarterly total since the first quarter of 2018.
Accessible supply, subsequently, has suffered, with CBRE reporting that the overall industrial availability rate fell to 6.4% during the second quarter, well below the 30-year average of more than 9%. The vacancy rate during the quarter was 4.0%, lowest since the last three months of 2019. With many tenants seeking first-generation space, availability is expected to stay low even with a record 410 million square feet under construction.
Of course, such limited availability and sky-high demand have pushed the rent needle skyward, with asking rents up 2.9% quarter to quarter and 9.8% year to year — with CBRE reporting that rent growth is expected to hit a double-digit pace by the end of the year. Second quarter asking rents were at $8.66 per square foot, the highest ever recorded by CBRE.
