TAG Industrial Watch: April 26, 2025
Taking a break from the ongoing trade war saga, this week we turn our attention to the first quarter performance of the industrial market. For a record 11 consecutive quarters, new supply across the top 50 metros outpaced demand, inching the vacancy rate to a 10-year high of 7.0%. Previous estimates of rent growth underwent significant revisions and only increased by 0.4% in Q1, representing the lowest level since the annual rate flatlined in 2011. Vacancies among small industrial properties (10K SF – 50K SF) remained relatively low at 4.4% compared to midsize (50K SF – 200K SF) at 7.0% and big-box at 8.8% (over 200K SF). As TAG expected, the rent growth of small industrial properties (2.3%) now sits atop midsize (-0.3%) and big-box (-0.5%) with the recent revisions.
With regard to major markets serviced by TAG Industrial, Chicago continued to outperform the national market with a vacancy rate of 5.8% but recorded its first quarter of negative absorption since 2011. Annual rent growth in the Windy City remained just above its decade’s low at 2.3%. Between Saint Louis and Kansas City, demand was exceptionally strong, allowing the vacancy rate to drop to 4.3%. Unfortunately, rent growth in America’s Heartland decelerated to 2.2%.
In the Dallas-Fort Worth market, industrial demand exceeded supply for the first time in two years, pushing the vacancy rate down to 9.3% as rent growth sat at 2.9%. Down in Houston, net absorption slipped to the lowest level since 2017, pushing vacancies up to 6.8 percent. However, annual rent growth in the oil refining capital jumped 120 basis points on the quarter to 1.8%. The combined markets of San Antonio and Austin experienced a noticeable increase in vacancies to a 20-year high of 11.2%, which weighed on rent growth at 0.7%.
Moving out west to Denver, vacancies held steady at 8.3% as demand kept pace with supply, yet rent growth sat at just 0.7%. Lastly, in Los Angeles, demand snapped an 11-quarter streak of negative absorption, exceeding supply and pulling vacancies down to 6.1%. Nonetheless, rent growth contracted deeper into negative territory at -5.8% (CoStar, minimum 10,000 SF, classes A, B, & C).
I N D U S T R I A L N E W S
Importers Rush To Bonded Warehouses As
Tariffs Drive Up Storage Demand
GlobeSt.com – April 17, 2025
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Growing Share Of Industrial Occupiers
Buying Instead Of Renting
Bisnow – March 26, 2025
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Busiest U.S. Ports For Chinese Freight, Los Angeles,
Long Beach, See Steep Drop In Container Vessel Traffic
CNBC – April 22, 2025
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Faceoff In Manhattan: Should US ‘Decouple’
Supply Chains From China?
FreightWaves – April 23, 2025
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Why Should I Care If The US Dollar Falls?
BBC – April 22, 2025
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R E G I O N A L N E W S
Terrell Considering 933K-SF Industrial Park
Connect CRE – April 14, 2025
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Northern Builders Developing 30,600-Square-Foot
Build-To-Suit Industrial Facility In Plainfield
REjournals – April 24, 2025
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Venture One Acquires 37,287 SF
Industrial Building In Elmhurst, Illinois
REBusiness – April 16, 2025
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Buchanan Capital Acquires Austin Warehouse
Commercial Property Executive – April 23, 2025
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Industrial Outdoor Ventures Adds To Denver Portfolio
Mile High CRE – April 21, 2025
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