The U.S. Sum of Markets vacancy rate increased by 100 bps to 14%, marking the highest quarterly vacancy increase in two decades. Space demand shrunk by 30 million sq. ft., marking the second highest decline in demand on the record since 2001. However, the increase in vacancy and decline in demand didn’t lead to substantial rent declines, with the TW Rent Index dropping just -1.6% nationally.
Trends in the industrial sector remained healthy in the third quarter, as continued strength in e-commerce spending and rebounding economic activity helped to support warehousing demand. Going forward, EA expects that e-commerce activity will experience another surge in Q4 during the holiday season and will continue to maintain an elevated share of retail spending even as the economy recovers from the pandemic.
We expect national multifamily fundamentals to bottom out in early 2021 and to recover by mid-2022 with smaller markets leading the recovery in early 2022 followed by major metros. The long-term outlook for multifamily remains strong, with both rent and vacancy expected to recover to pre-COVID levels by Q2 2022.