TAG Industrial Watch: June 10, 2023

A lot can change in just one year. At the end of the second quarter in 2022, the industrial real estate market celebrated its lowest vacancy rate on record at about 3.9 percent (CoStar, Top 50 metros, minimum 15K sf). Industrial demand would remain strong until the first quarter of 2023 when net absorption outright collapsed toward “normal” levels. Some estimates show a decline in demand of over 40 percent during Q1, not annually, but quarterly (GlobeSt.com).

To make matters worse, new supply is breaking records with the passing of every quarter. As demand continues to slide in the second quarter, deliveries are outpacing absorption by a factor of four; meaning, for every one-square-foot absorbed, four feet are being supplied. As a result, the national vacancy rate has leaped by 110 basis points to an estimated 5.0 percent. As TAG predicted, most of the pain is being felt among big-box warehouses. While small industrial properties are experiencing negative absorption, vacancies are only up a projected 50 basis points to 3.5 percent since last summer (CoStar).

I N D U S T R I A L   N E W S

Bulk Industrial Demand Drops Sharply In Q1
Commercial Property Executive – May 23, 2023
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Industrial Investors Show More Caution On New Deals
CoStar – May 26, 2023
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Frank Crivello: The Inflation Reduction Act’s Impact On The Supply Chain
Bisnow – May 26, 2023
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Commercial Real Estate Debt Maturities: A Certainty. How Bad? It Depends
Globe St. – June 1, 2023
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$532M IOS Investment Underscores Hot Market For Rising Industrial Niche
CNBC – June 1, 2023
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R E G I O N A L   N E W S

Bridge Industrial Scraps Plans For Industrial Park
Connect CRE – June 8, 2023
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Co-Warehousing Space In North Denver Set To Open This Summer
Bisnow – May 23, 2023
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Dalfen Industrial To Bring 575 KSF Campus To Dallas
Commercial Property Executive – June 8, 2023
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Office-To-Industrial Conversions Expanding In Orange County
Globe St. – May 17, 2023
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Lovett Industrial Announces Two Build-To-Suit Industrial Buildings
Totaling 960,956 Square Feet Inside The Largest Business
Park Under Development In Infill Dallas, Texas

Businesswire – May 30, 2023
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