Industrial Sector Demand, Deliveries Reach New Records
The industrial sector saw record-setting demand and deliveries in first-half 2021, reported Cushman & Wakefield, Chicago.
The market absorbed 110.2 million square feet in the second quarter–the most space absorbed in a single quarter since Cushman started tracking the sector and nearly double the 56 million square feet reported in second-quarter 2020, the firm said in its second-quarter Industrial Marketbeat report.
This brought 2021 absorption totals to 203.9 million square feet, the report said. Of the 81 industrial markets examined, nearly half saw more than one million square feet of positive net absorption and 11 markets have seen more than five million square feet of positive absorption year-to-date.
“Warehouse/distribution space proved once again to be the strongest secondary property type,” Cushman said. The subsector has absorbed 187.3 million square feet of space year-to-date.
New industrial leasing activity surpassed 100 million square feet for the twenty-second consecutive quarter, the report said. Occupants leased more than 212 million square feet, just shy of the first quarter’s record high 214 million square feet.
Strong demand has placed the market on pace to see another 600-plus million square feet leased by year-end, which happened for the first time ever last year, Cushman said. More than half of the markets studied posted year-over-year leasing activity increases and 27 markets saw more than five million square feet of net new leasing activity. “Among the key drivers stimulating robust demand are digital sales, sparking more e-commerce leasing as well as third-party logistics providers that occupy warehouse/distribution space,” the report said.
New deliveries exceeded 73 million square feet during the second quarter and 140 million square feet in the first half, down a bit from last year but above the five-year average. “Up until last quarter, supply has outpaced overall demand since 2019,” the report said, noting second-quarter demand outpaced supply by more than 63 million square feet. “This was an unexpected, but welcome change that brought a little bit of balance back to the market and drove vacancy back down,” it said.