Industrial Is Showing Some Signs of Softening

The US industrial market is showing some signs of softening despite overall strong fundamentals, with vacancy ticking up 20 basis points in the third quarter and net absorption ringing down 132 million square feet from Q2.

New third quarter research from Cushman & Wakefield notes that vacancy is predicted to creep even higher by the end of the year, but analysts say it will remain “near historically low levels” before rising to the mid-4% range by the end of next year. Rent growth is also expected to moderate compared to the double-digit rates observed over the past year, and supply is also predicted to exceed demand over the next few quarters as the overall economic uncertainty persists and cools demand for industrial space.  In addition, “robust totals” are expected of the construction pipeline, which will make observing individual markets for signs of oversupply critical, according to Cushman experts.