A year ago, industrial availability rates were comfortably below their long-term trend in nearly all U.S. markets. Denver was the sole exception. That backdrop has completely changed today.

Occupier demand is down, particularly for companies in interest-rate sensitive sectors, such as for-sale housing. Riverside, CA, where the availability rate has jumped from 2.3% to 7.3% (Q3 2022-Q3 2023), is a microcosm of the changed picture. Price resistance is also a factor in the new market dynamics. High rental rates have pushed occupiers to more economically competitive markets like Phoenix, where the availability rate remains below average.

A construction boom – inspired by pandemic-era demand and financed before interest rates spiked – has also caused availabilities to rise above their long-term trend. The construction boom has largely dissipated since credit conditions tightened dramatically in 2023. If the economy stays resilient and space absorption is aligned with expectations, availability should once again drift back toward equilibrium.