Q1 2024 U.S. Industrial Real Estate Market Report

The U.S. industrial market performance continues to downshift as the second half of 2024 approaches. While the national vacancy rate is not expected to rise well above its 20-year average of 7.1%, the next 6 to 12 months could still prove to be the market's most challenging period over the next five years.

National industrial real estate trends

• Accelerating completions of new industrial developments have caused the U.S. industrial vacancy rate to rise from a record low 3.9% in mid-2022 to 6.2% as of Q2 2024. This is still below the market's 20-year average vacancy rate of 7.3%.
• Year-over-year rent growth has slowed to 5.2%. New supply additions are likely to push vacancies in the near term and cause rent growth to decelerate further.
• Higher interest rates have caused construction starts on new industrial projects to plummet since last fall. The volume of projects completing construction each quarter has already begun to decline and will likely hit 10-year lows in late 2025.
• The stock of U.S. industrial properties is now growing at the fastest pace in more than three decades. Over the past 12 months, the total stock of U.S. industrial space has grown by 2.8%, almost triple the pre-pandemic 20-year average for annual supply growth.
• Across the entire United States, there is about 1.9 billion square feet (SF) of industrial space listed as available for lease among existing properties and 400 million SF of unleased space currently under construction.
• Risks of oversupply are most heavily concentrated among properties 500,000 SF or larger.

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