Market Trends
- Vacancy has steadily climbed four consecutive quarters now, ending Q2 at 7.2%, a 120-basis-point (bps) increase year over year. Slowed leasing activity and speculative deliveries thus far into 2023 have provided the room for vacancy to rise.
- The construction pipeline appears evenly distributed between spec and build-to-suit projects, however just three projects, Amazon (Northwest), Pepsi (Northeast) and Dollar General (East) make up the entire to-suit pipeline. The outstanding speculative product remains about 90% available.
- In the near-term expect deliveries to continue to weigh on vacancy and the construction landscape to begin to favor build-to-suit product. Rent growth has been robust, up nearly 30.0% since Q2 2021, expect slowed growth to coincide with leverage gradually shifting back towards the occupier.