- Only 1.8% of the nation’s existing industrial stock is currently under construction, highlighting a slowdown in new development.
- After historic new supply levels in 2021 and 2022, developers slowed down significantly due to unsustainable activity levels.
- Through October 2024, industrial completions totaled 310.2 MSF, but Q3 completions lagged at just 69.3 MSF.
- Metro areas like Phoenix (6.7%), Kansas City (4%), and Memphis (3.5%) lead in industrial construction, while Bridgeport (0.2%) and Orange County (0.5%) have fallen behind.
The US industrial market, once riding high on unprecedented development levels, has seen a significant slowdown in new construction.
Currently, 358.8 MSF of industrial space is under construction, representing just 1.8% of the total existing stock, according to Yardi Matrix.
Sharp Slowdown
As reported by GlobeSt, this marks a steep decline from 2021 and 2022, which were record-breaking years for industrial development with over 1.1 BSF delivered during that period. While this surge eased pent-up demand, Yardi noted that this activity level was unsustainable in the long term.
Through October 2024, industrial completions totaled 310.2 MSF, with notable slowdowns in Q3. Compared to an average of 103.4 MSF per quarter based on earlier trends, Q3 saw just 69.3 MSF completed.
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Regional Winners & Losers
The construction pipeline varies significantly across metro areas. Phoenix leads the nation with 6.7% of its existing stock under construction, followed by Kansas City (4%) and Memphis (3.5%). Other active markets include Philadelphia (2.8%), Columbus (2.6%), and Denver (2.5%).
In contrast, with minimal industrial construction, Bridgeport (0.2%) and Orange County (0.5%) are at the bottom of the list. Other laggards include Chicago, Cincinnati, and the Twin Cities, each with just 0.6% of stock under construction.
Context & Outlook
A few areas in particular exemplify the current construction downturn:
- In Phoenix, where the annual average starts were 32.5 MSF from 2021 to 2023, just 10.7 MSF have begun construction in 2024.
- Dallas, with an annual average of 42.6 MSF in starts during the same period, has only 13.3 MSF on a YTD basis.
- The Inland Empire, a key logistics hub, saw one of the sharpest declines. It averaged 57 MSF of annual starts in 2021 and 2022 but recorded just 7M in 2023.
The slowdown reflects a shift toward moderation after years of historic growth. While industrial demand remains strong, developers are scaling back activity to avoid oversupply and respond to broader economic pressures.
Metro areas with ongoing development pipelines may maintain an edge in capturing future industrial demand, but the broader market is poised for recalibration.
