CHICAGO--(BUSINESS WIRE)--
The overall national industrial vacancy rate edged higher in the fourth quarter, climbing 20 basis points (bps) to 6.7%, according to the latest research by Cushman & Wakefield (NYSE:CWK). This remains 30 basis points (bps) below the 10-year, pre-pandemic average.
“Industrial vacancy is likely nearing its peak for this cooling cycle in the coming quarters,” said Jason Price, Senior Director, Americas Head of Logistics & Industrial Research. “In Q4 we saw positive annual absorption in 60% of the 84 markets we track, and eight markets reported more than 5 million square feet (msf) of absorption for the year.”
Overall net absorption in the fourth quarter measured 36.8 msf up from the 33.3 msf recorded in Q3 but down 20% on a year-over-year basis. Approximately 135 msf of industrial product was absorbed in 2024 by year-end as some markets struggled with occupier consolidations and right-sizing throughout the year.
Quarterly new leasing activity remained slow at approximately 130 msf in the fourth quarter and was down 15.7% compared to one year ago. Since the start of the year, 591.3 msf of deals were transacted, down 4.8% year-over-year. However, 2024 ranked as the sixth strongest year on record for new deal activity. There were seven markets which surpassed 20 msf of new leasing activity for 2024 with the Inland Empire (46 msf) and Dallas/Fort Worth (45.5 msf) exceeding the 45-msf mark for the year.
“We've witnessed an uptick among firms looking to lease larger buildings to support their omnichannel fulfillment strategies and maintain inventory for their e-commerce, wholesale, and retail stock. This trend is not just about space, but about efficiency and customer satisfaction,” said Jason Tolliver, President, Logistics & Industrial Services. “Meanwhile, we're also seeing a flurry of activity to support forward-deployed stock models, a strategy that keeps products closer to the market they serve and where customers order them, promising quicker deliveries and happier customers.”
New construction deliveries continued to decelerate for the second straight quarter. Just 85.3 msf of new industrial product was completed in Q4, down 8% quarter-over-quarter and 48% versus one year ago. Over 65% of the total was speculative product, much of which was delivered vacant. For the year, 425.5 msf of industrial facilities were completed, with 22% (92.6 msf) build-to-suit (BTS) and 78% (333 msf) speculative; compared to 17% BTS and 83% speculative in 2023. The total was 31% lower than the previous year, with annual delivery totals expected to continue to fall in 2025. Completions continued to be concentrated in the South and West regions, accounting for 50% and 29% of the 2024 annual total, respectively. Only four markets saw more than 20 msf of completions year-to-date, compared to 10 markets in 2023. Meanwhile, as construction starts remained tempered overall, the under-development pipeline has continued to thin out, dropping by 36% annually to its lowest level (290.5 msf) since Q3 2018. One-third of that total is BTS developments, which will likely help stabilize vacancy in the second half of this year and beyond.
Asking rents ticked higher by another 1% quarterly during Q4 to $10.13 psf. For the year, asking rents climbed by 4.5%, fueled by the South region (6%) and Northeast (3.8%). Conversely, markets in the West region saw rents continue to soften over the last year, dropping by 2.3% on average. On the market level, 25 markets saw asking rents fall year-over-year, including five that reported double-digit decreases; led by Raleigh/Durham (-14%), Inland Empire (-14%), and Los Angeles (-13%). Still, 69% of the markets yielded annual asking rent increases, 21 of which saw rents climb by 5% or more, many of which were concentrated in the South region.
“After a year of hesitancy, logistics is entering a new, sustained growth phase. Corporate capital is being deployed to optimize supply chains, diversify networks, and minimize potential risks. What's particularly encouraging is the proactive approach of retailers, wholesalers, and 3PLs, who are not just reacting to the market, but shaping it. 2025 will be a year characterized by this bias for action,” said Tolliver.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more. For additional information, visit .
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