The industrial real estate landscape continues to evolve, presenting both challenges and opportunities for occupiers and investors. The Q4 2024 North American Industrial Fast Facts from the Liles Industrial Team &
Cresa
highlights crucial market trends, vacancy shifts, and strategic recommendations for the coming year.
- Vacancy Rates Continue to Rise The U.S. industrial vacancy rate has climbed for the tenth consecutive quarter, reaching 7.0%, its highest level since 2014. This trend has created a more tenant-friendly leasing environment, with landlords offering longer free rent periods and reduced escalations to attract occupiers.
- Construction Pipeline Slowing Down New industrial construction starts have declined significantly, with projected completions in 2026 expected to hit an 11-year low. While certain regions like the Sunbelt and Midwest still experience ongoing deliveries, the lack of new development could lead to space constraints in the long term.
- Big-Box Industrial Oversupply Large-scale logistics properties (100,000+ SF) are facing rising vacancy rates, now exceeding 9%, the highest level since 2012. Markets such as Phoenix, Indianapolis, and Austin have been particularly affected by an oversupply of speculative development. However, small-bay industrial spaces (under 50,000 SF) remain in high demand, maintaining vacancy rates below 4%.
- Rent Growth Slowing Annual rent growth has slowed to 2.2%, the weakest pace since 2012. While some markets still see stable pricing, others are experiencing softening conditions, creating favorable negotiation opportunities for tenants.
- Leverage Tenant-Friendly Conditions Now is the time to negotiate aggressively. With high vacancies and slowing rent growth, tenants should push for longer free rent periods, lower annual escalations, and flexible renewal options—especially in large-bay distribution spaces.
- Act Before Supply Tightens With new construction slowing, the current oversupply presents a short-term leasing opportunity. Businesses planning long-term expansion should secure leases before the market tightens in 2026.
- Monitor Economic Policies & Trade Risks Rising tariffs and economic uncertainties are impacting industrial tenants. Companies should diversify supply chains and explore alternative port markets to mitigate potential disruptions in shipping and inventory management.
- Maximize Existing Warehouse Space Before committing to new leases, occupiers should optimize their current space by implementing racking systems, automation, and multi-level configurations. Warehouse utilization is still above historical norms, making efficiency improvements a cost-effective alternative to expansion.
At Cresa’s Liles Industrial Team, we specialize in advocating for occupiers, ensuring they navigate this dynamic market with the best possible lease terms and real estate strategies. Our relentless team of experts is here to help businesses secure space, optimize costs, and stay ahead of market shifts.
As rising vacancies meet declining construction activity, the balance of power is shifting in favor of industrial tenants—but only for a limited time. Now is the prime window to secure favorable lease terms before supply tightens in the coming years.
For a deep dive into market trends, vacancy data, and rent shifts across North America, download the full Q4 2024 North American Industrial Fast Facts report.
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