The vacancy rate for industrial buildings across the country is up — and there are more properties slated to hit the market soon, even as President Trump’s newly enacted tariffs raise questions about the U.S. economy.
The national industrial vacancy rate in June came in at 9 percent, a 290 basis-point increase year over year and a 50 basis-point rise compared to May, according to a new report from CommercialCafe, Yardi’s commercial real estate listings platform.
There also is no shortage of square footage in the pipeline. So far this year, about 147 million square feet has been constructed. There is another 342 million square feet underway — near pre-pandemic levels. When these properties hit the market, it will increase the industrial stock in the U.S. by 1.7 percent.
The spike in vacancies reverses what the industry saw during and immediately after the pandemic: consumers, stuck at home, bought more goods online than ever, which boosted already high demand for warehouse space. This led developers to build pre-leased spec properties. Now, economic uncertainty is causing some industrial tenants to think twice about their supply chains, according to the report.
After months of back and forth, Trump on Friday instituted tariffs on a range of countries after failing to strike trade deals with those nations. India faces a tariff rate of 25 percent on its exports to the U.S. Canada, whose economy has already taken a hit in part because of the trade policies, was slapped with a tariff rate of 35 percent, and Switzerland, 39 percent.
The long-term effects of tariffs policies are not known yet: some experts believe they could trigger a slowdown in trade and potentially weakened demand for industrial space. In April, some investors were snapping up domestic warehouses in the hopes that manufacturing would return to the U.S.
Industrial developers are betting on some regions more than others. Industrial construction in Dallas-Fort Worth and Houston has doubled year over year, according to the report. Dallas-Fort Worth also has the greatest amount of space in the pipeline, of about 30 million square feet, and the sixth-highest industrial vacancy rate — about 11 percent — among the major markets in the U.S.
The market that recorded the greatest vacancy rate in June was Memphis, with a rate of 12.6 percent. Kansas City and Bridgeport had the lowest rates, of under 5 percent.
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