Allendale Community for Senior Living Lobby

< Back

Cushman & Wakefield National Industrial
9500 W. Bryn Mawr Avenue
Suite 600
Rosemont, IL 60018

Download Word Doc:Click Here

Request Hi Res Photo:Click Here

Release Date: Friday, July 18, 2014

Media Contact: Evelyn Weiss Francisco (201) 796-7788

Vacancy Rates, Spec Construction Reach Pre-Recession Levels at Mid-Year 2014

July 18, 2014 – With vacancy rates and speculative construction back to pre-recession levels, the U.S. industrial sector at mid-year 2014 continues to lead the country’s commercial real estate recovery. Cushman & Wakefield today released its second-quarter industrial market statistics, which also reveal strong occupancy gains and rising rental rates in the face of diminishing big-box supply.

“With demand for goods from consumers and businesses rising at a healthy pace, ecommerce sales rising by 15 percent a quarter, and manufacturing production and shipments increasing, the national industrial market has, indeed, entered a time of significant growth and progress,” indicated John Morris, leader of Industrial Services for the Americas at Cushman & Wakefield.

The U.S. industrial vacancy rate continued to trend down during the second quarter to a current 7.2 percent, 80 basis points lower than one year ago and the lowest level since first-quarter 2008. This represents a significant drop from the recent high of 10.8 percent posted during first quarter 2010. Two California markets currently boast the lowest industrial vacancies in the nation, including the San Francisco Peninsula (3.7 percent) and Orange County (3.9 percent).

Net demand remained strong during the second quarter and is on track to surpass last year’s total, with 62.5 million square feet of net industrial occupancy gains at mid-year. Atlanta is leading the nation, with 8.9 million square feet of space absorbed to date in 2014, followed by Inland Empire with 7.5 million square feet. Only seven of the 38 markets tracked by Cushman & Wakefield posted a net loss in occupancy at mid-year. In some cases, a net loss in occupancy is as much about an increase in supply as it would be about any decline in demand, however.

With the tightening industrial market, average asking rents continue to trend upward in most markets. The national average direct asking rent, at $6.09 per square foot, is up 5.2 percent from one year ago and 11.7 percent higher than the recent low of $5.45 per square foot posted during the first quarter of 2011.

Due to a limited supply, though, leasing activity is off to a slower start for the industry in 2014, though not necessarily for Cushman & Wakefield. “Less available supply, especially in the highly competitive industrial big-box market, has prompted a slow-down in leasing activity so far in 2014,” Morris noted. Totaling 161.5 million square feet, tenant commitments are down 6.0 percent year over year. Only 13 out of 38 markets posted increased leasing. Still, eight markets recorded double-digit gains year over year, led by Silicon Valley (up 30.7 percent), Central New Jersey (up 24.8 percent) and Philadelphia (up 26.2 percent). For Cushman & Wakefield’s industrial group, however, leasing is up more than 25 percent this year.

“At the same time, increased construction activity – both build-to-suit and speculative – is bringing more quality industrial supply into the marketplace,” Morris added. “Currently, 98.4 million square feet of new product is under development. Virtually all of the top markets are seeing construction pipelines return to pre-recession construction levels.” Dallas/Fort Worth and Inland Empire are leading the way, with 16.0 million square feet and 13.4 million square feet under development, respectively. As a market, Dallas absorbed more than 15 million square feet in 2013, and is set to add more than 20 million square feet in construction by the end of 2014.

At mid-year, build-to-suit industrial construction deliveries totaled 21.4 million square feet, with an additional 30.4 million square feet anticipated by year end. In terms of spec construction, 67.3 million square feet of new product is expected to be delivered this year. This is the highest level of new spec construction since 2008, although it remains well below that year’s total of 112.4 million square feet.

“By the end of the year, new industrial construction will total 119 million square feet – more than double last year’s total and the highest since 2008, when 135.9 million square feet of inventory was added,” Morris said. “However, with demand from both traditional and online retailers likely to remain strong over the next few years, we do not see supply catching up with demand anytime soon.”

Lowest National Industrial Vacancy Rates




1.   SF Peninsula, CA



2.   Orange County, CA



3.   Greater Los Angeles, CA



4.   Denver, CO



5.   Oakland, CA



6.   St. Petersburg/Clearwater, FL



7.   Philadelphia, PA



8.   Lakeland, FL



9.   Houston, TX



10.  Portland, OR



NATIONAL AVERAGE                                   7.2%            -0.8

* Indicates change in "percentage points" from prior year (not percent).


About Cushman & Wakefield National Industrial