by Dan Rafter
The industrial market is ending the year on a hot streak, according to a recent report by Lee & Associates.
But this should be no surprise to anyone who’s been following this commercial sector. The industrial sector has been strong throughout the Midwest this year, with vacancy rates falling and spec construction projects rising.
According to Lee & Associates’ third-quarter industrial report, the national vacancy rate for warehouse and flex space combined fell another 10 basis ponits in the third quarter, hitting a low 6.7 percent. Since the end of last year, the industrial vacancy rate has fallen by 40 basis points.
Because of falling vacancies, the average industrial asking lease rates rose to $5.63, according to Lee & Associates.
New construction is up, too. Lee & Associates reported that new deliveries for both speculative and build-to-suit projects for the third quarter hit 59.3 million square feet contained in 391 buildings. That increase came after a second quarter that saw a nearly 51-million-square-foot gain in indusrial inventory.
These big numbers mean that the United States can now boast an industrial property base of 21.44 billion square feet, with another 186.7 million square feet still under construction. Lee & Associates says that nearly all of this new square footage falls in the bulk-distribution category.
There seems to be little risk of overbuilding, too. Lee & Associates reported that net absorption for the overall industrial market in the third quarter hit 76.1 million square feet, just ahead of the 75.4 million square feet of space that the industry absorbed in the second quarter. More than 308 million square feet of net absorption has been recorded in the past four quarters, according to the company’s report.