New industrial starts in 2023 totaled 314.6 million square feet, down significantly from the 593.2 million square feet in 2022.
Due to tighter underwriting policies and more expensive capital, transaction activity will continue to diminish in 2024.
Port activity normalized, manufacturing surged in North America, and interest rate hikes dampened transaction activity and new development.
Industrial vacancy rates rose 70 basis points from 3.9% in January 2023 to 4.6% in October but remained unchanged month-over-month.
Sellers have yet to readjust price expectations, as buyers are unwilling to pay high prices amid expensive and limited financing options.
Competition for industrial space will increase in 2024 and 2025, but we anticipate construction starts to pick up again in 2026.
As capital has become scarcer and more expensive, industrial construction starts and sales have slowed down in 2023.
The sales volume dropped significantly compared to the $55 billion recorded during the same period last year.
New starts continued to moderate across top industrial markets in the U.S., with few exceptions, such as Phoenix and Dallas.
While the amount of space under construction remained high, new starts have started to slow, reflecting the current economic issues.
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