TAKEAWAYS
INDUSTRIAL LEASING TICKS UP
Here are five key takeaways from the report: 1 Post-election boost expected for leasing. After a sluggish first half, Q3 2024 leasing improved to 4.3% below Q3 2019 levels. Tenant activity is expected to pick up in the coming quarters post-election. 2 Port volumes rise as shippers pull forward. TEU volumes are up 14.8% year-to-date as shippers pulled freight forward ahead of the ILA strike, a trend likely to continue amid potential tariff escalations. 3 Demand surges from China-focused 3PLs. Logistics providers are leasing large spaces in port markets, fueled by tariff concerns and ecommerce growth, including Temu’s 455 million app downloads in 12 months. 4 Construction has finally normalized. The construction pipeline is down 56% from its 2022 peak, now near 2019 levels, with California’s AB-98 bill to limit supply in key markets like the Inland Empire. 5 Existing leases still below market rates. A large mark-to-market looms on leases signed in recent years, thanks to 70% rent growth in the past five years. Some 2023 leases may now be above market.
The consensus is in: The industrial leasing market for logistics centers, warehouses, and distribution centers is on an upswing. As vacancies stabilize, industrial leasing is poised for a rebound amid opportunities and uncertainties from a new administration, finds the State of the U.S. Industrial Market–Q3 2024 report from global real estate firm Savills. The report provides key metrics on supply, demand, and pricing of industrial real estate along with analysis of related economic drivers at both national and market-level geographies.
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16 Inbound Logistics • December 2024
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