Economists' Outlook

Housing stats and analysis from NAR's research experts.

Commercial Weekly: Industrial Availability Rate Further Declines

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As of March 4, 2022, industrial supply continues to lag behind demand, and logistic space continues to make up the majority of supply at 89%. Currently, of the 390 metro markets that have experienced a change in supply, 85% have experienced an increase over the past rolling three-month period.1 Over the past 12 months, 280 msf of industrial space has been delivered in comparison to the 490.1 msf absorbed. While this level of supply is not commensurate with demand, it is above pre-pandemic levels, as supply picked up in the second half of 2021. However, the availability of industrial space remains scarce in the current environment.


Overall industrial availability declined to 6.8% at the close of Q4 2021 and along with it, the vacancy rate further compressed to 4.2% – both record lows. As of March 4, 2022, the vacancy rate fell to 4.1%. Specialized space, manufacturing and all other properties that are neither logistics nor flex space (such as telecom and data housing centers) saw availability rates decline to a low of 4.5%. Logistic space and flex space fell to 7.3% and 8.4%, respectively.


In the current industrial landscape, the lack of supply is the main speed bump. Even with the significant amount of industrial space in the pipeline, more development may be necessary in order to meet the current level of demand, but there are issues there regarding available land to support that development. Over the course of 2021, at the national level, the industrial availability rate declined by 0.9% from 2020 in the midst of increasing demand. But of the five major commercial metro areas,2 Dallas-Fort Worth was the only metro to see an increase in the availability rate, increasing to 9.6% from 9.0% in 2020. Aside from Dallas-Fort Worth, of the remaining four major metros, the availability rate declined to 2.6% in Los Angeles, Inland Empire (4.1%), Atlanta (6.9%) and in Chicago (7.4%).


The industrial construction pipeline increased to 522 msf in Q4 2021, a record high for the industrial market and the first quarter where square footage under construction reached more than 500 msf. Of the industrial product under construction, 464 msf (89%) was logistic space. Industrial construction increased by more than 9.2% over Q3 2021 levels and by more than 49% over Q4 2020's level. The industrial supply coming on market should start picking up as pandemic-related supply chain issues are alleviated. Although the amount of industrial space under construction is increasing, the robust demand for new industrial space may keep industrial space availability at a low throughout 2022.

1 According to CoStar® market data

2 Based on historical sales deal size, the five major commercial metro areas prior to the pandemic were Los Angeles, Chicago, Dallas-Fort Worth, Atlanta, and Inland Empire.