TAG Industrial Watch: December 28, 2024

In 2024, the industrial market saw another year of positive absorption, albeit at the slowest pace since 2010. While it will be at least another month before enough data is collected to fully recap the year, it’s already clear how things played out among the three property sizes that TAG has covered in recent years. Small industrial properties experienced back-to-back years of negative absorption and demand for midsize warehouse space was basically flat on the year. In other words, all of the demand for industrial space in 2024 was essentially concentrated in big-box warehouses. However, big-box demand is quickly decelerating as vacancy rates exceed small industrial and midsize.

Interestingly, big-box vacant sublet space hit a record high of 1.0% since full market coverage began in 2007, exceeding the overall market’s historic high of 0.7% posted this year (CoStar, top 50 metros, minimum 10,000 square feet, Classes A, B, & C). Rising sublet vacancy rates, particularly among big-box warehouses, indicate that many companies overestimated how much warehouse space would be needed. Through November, retailers announced the closure of 7,100 stores, up 69% compared to the same period in 2023 (Bisnow). Unless these stores recoup their sales online, fewer brick-and-mortar stores equals less demand for warehouse space. Big-box warehouses kept the industrial market afloat this year but the same cannot be expected in 2025. As big-box vacancy rates continue to outpace the rest of the market, small industrial landlords should expect to be paid more attention from institutional investors.

I N D U S T R I A L   N E W S

Industrial Sublease Space Hits Record High in Q3
GlobeSt.com – December 2, 2024
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U.S. Retail Closures Up Almost 70% This Year
As Thousands Of Stores Prepare To Go Dark
Bisnow – December 17, 2024
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China Is Now 39% Of Global Auto Production;
Dominating Europe, Japan, U.S.
ZeroHedge – December 17, 2024
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US Factory Activity Slumps Further
In December As Tariffs Loom
Reuters – December 16, 2024
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American Reindustrialization:
A Powerhouse For Trucking Demand
FreightWaves – December 17, 2024
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R E G I O N A L   N E W S

Ryan Cos. Starts Final Phase Of
Pullman Crossings Industrial Park
Connect CRE – December 3, 2024
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Poised For Growth, Chicago Industrial
Market Resets To New Normal
REjournals – December 17, 2024
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Amazon Drops $162M On 200 Acres In SoCal
With Plans For 2.5M SF Warehouse
Bisnow – December 10, 2024
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Lovett Industrial Breaks Ground
On DFW Logistics Park
Commercial Property Executive – December 2, 2024
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Yellow Agrees To Sell A Dozen Terminals
To Estes, R&L Trucking Companies
CoStar – December 12, 2024
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