The industrial & logistics (I&L) overall vacancy rate ticked up 10 bps in Q3 to 4.4% due to an increase in new completions. Net absorption totaled 45.4 million sq. ft. in Q3 and 204.6 million sq. ft. on a rolling 12-month basis.
Net absorption increased by 16.8% quarter-over-quarter to 45.4 million sq. ft., marking the 38th consecutive quarter of positive net absorption.
The 55.7 million sq. ft. of new supply delivered in Q3 (224.2 million sq. ft. on rolling 12-month basis) was up 12.3% quarter-over-quarter but down 11.2% year-over-year.
Net asking rents rose 1.3% quarter-over-quarter in Q3 to average $7.57 per sq. ft.—the highest level since CBRE began tracking the metric in 1989. Rents have increased 5.7% year-over-year, more than 2 percentage points above the average annual growth rate since 2012.
E-commerce, food & beverage and home improvement companies continue to drive leasing activity, and many of these users are expanding in several industrial hubs.
An expected fall in GDP growth to 2.2% in 2019 from 2.9% last year has not had a dramatic impact on I&L market performance given strong jobs and wage growth.
Consumer sentiment remains strong and the unemployment rate is at a 50-year low of 3.5%. This, coupled with rising business inventories and industrial production, is highly supportive of the I&L sector.
With continued high levels of user demand and more available space options due to recent deliveries, strong gains in net absorption should occur in Q4.