Despite continued positive absorption, deliveries fuel rising vacancy
Quarterly net absorption, continuing to post positive marks and averaging about 5.5 million square feet (msf) over the past eight quarters, is being outpaced by the sheer amount of speculative development in the market. Of the 11.1 msfof deliveries in Q1 2024, 8.2 msfof the product was delivered vacant—making up about 270 basis points (bps) of vacancy alone. While vacancy did breach the double-digit mark in Q1 and matched the highest quarterly rate since early 2017, there is still runway for further supply side pressures. Of the current construction pipeline, 22.1 msfof available speculative product is scheduled to come online through the remainder of the year, inevitably pushing vacancy higher as the market continues to try to absorb the 67.5 msf, or 22.5%, of current inventory that has delivered since Q2 2022.