Six Industrial Markets See Lower Vacancy Rates and Higher Rents in the First Half of 2016

Six Industrial Markets See Lower Vacancy Rates and Higher Rents in the First Half of 2016 Facebooktwitterpinterestlinkedin

There has been a recent boost in the industrial side of real estate causing the rents to raise and vacancy rates to drop. Let’s take a look at the six core industrial markets whose demand has risen in the first half of 2016.



Atlanta is having another productive quarter as some large industrial tenants took occupancy of new buildings. This is not a new occurrence for this area. Atlanta has had 20 consecutive quarters of strong positive activity since the end of 2014. Rents are reaching $3.02/SF and occupancy gains totaled over 2.6 million square feet.


chicago theater

This industrial sector is record-breaking, recently ranked the third strongest market with absorption at 3.9 million square feet. Vacancy continues to decrease and construction is on the rise with 13.8 million square feet of construction in the works. Rents have been on the upward swing thanks to Chicago’s improving vacancy rate. The weighted average asking rents inched up from the previous quarter mark of $4.74 per square foot to $4.79 per square foot net.

Dallas – Fort-Worth

Dallas - Ft Worth

DFW is seeing historically low vacancy rates and that means there is a lack of space on the market. Developers have responded with increased construction. About 23.9 million square feet of industrial space is currently under construction, almost 10.8 million square feet higher than last year. Absorption overall for the year reached close to 11 million square feet, increasing by 9.6% over 2015 mid-year levels.

Los Angeles

Los Angeles

Los Angeles had a record-breaking year adding 45 big-box locations to the area, a total of 22.8 million square feet. In the first quarter, 2.4 million square feet of construction projects are underway. Demand is not the concern in this market, but supply. Land is in very short supply and also it is very expensive. As a result, we aren’t seeing as many new development projects. This is all putting a damper on leasing activity. Rents have been trending up since 2010 and are at a growth rate of 13.1% in the first quarter. Expect to see the rents to continue in this upward swing because of the demand for land and construction costs.

New Jersey/Lehigh Valley/Eastern PA

New Jersey

This area is seeing increased rental rates, record levels of construction, and strong investor demand for industrial space. Vacancy rates are at an all-time low 4.9 percent. Rental rates are at $4.95 per square foot and are expected to increase as the new construction is delivered. Big box leasing doubled within the year at 18.4 million square foot and is all leased up by the second half of the year.



Toronto is seeing quite the slowdown since their record-setting 2015. Now that construction activity is starting to catch up to tenant demand for new space, they are seeing a steady net absorption. So far in the first quarter we’ve seen nearly 2.5 million square feet of industrial product completion in the area. The net asking rents are at an overall average of $6.20 per square foot with gross rental costs averaging just above $10 per square foot. There is currently around 6 million square feet of big-box space under construction and it will probably plateau in the foreseeable future.