There is more warehouse space available in the U.S. “than at any time since the pandemic,” reports The Wall Street Journal (subscription).
What’s going on: “The average warehouse vacancy rate across the U.S. jumped to 5.2% in the fourth quarter of 2023 from 4.6% the previous quarter and 3.1% a year earlier, according to a new report from commercial real-estate services firm Cushman & Wakefield.”
- It’s the first time since 2020 that the vacancy rate has risen above 5%.
- During the pandemic, warehouse-space demand soared as businesses rushed to get inventory in position for quick delivery to customer homes—and developers hurried to build the needed storage space.
What it could mean: “Industry experts have warned the leasing slowdown raises the potential for a glut of warehouse space in the coming months with hundreds of million square feet of new development in the construction pipeline. Much of that space is being built without tenants lined up, known in the real-estate sector as speculative projects.”
However … Businesses are still leasing enough storage to keep rents rising.
- In the last quarter of 2023, the average cost of industrial space increased 10% year-over-year.
- Meanwhile, demand for the space remains strong in “industrial hubs,” including Houston, Southern California and Eastern Pennsylvania.