Vacancy persists as oversupply of sub-500k square foot buildings weighs on market
Vacancy continues to climb, up 60 basis points (bps) from last quarter. The construction pipeline, delivering approximately 30.0 million square feet (msf) of new inventory year-to-date, has provided plenty of large, big-box options. However, the real glut is in buildings under 500,000 square feet (sf), with inventory in the 50,000 to 500,000 sf range making up about 9.0% of current market vacancy, or approximately 29.5 msf. Conversely, buildings over 750,000 sf account for just 7.2 msf of total vacancy. To put the space glut into context, yearly net absorption from 2019 to 2023 averaged approximately 17.0 msf, about half of what is currently vacant in the sub-500,000 sf category.