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US Industrial Market Suffers Steep Q4 Decline

The industrial vacancy rate increased for a fifth consecutive quarter to end the year at 8.8%, its highest level in 3 ½ years.

By John McCloud | Updated on January 28, 2009

The industrial vacancy rate increased for a fifth consecutive quarter to end the year at 8.8%, its highest level in 3 ½ years, according to the Q4 national report from Grubb & Ellis. The recent rate of increase has been moderate, averaging 30 basis points in each of the past three quarters.

Vacancy remained lowest in Los Angeles County, but Oakland, CA; Wichita, KS; Long Island, NY; and Madison, WI also ended the year with sub-5 percent rates. Southwest Michigan (the Kalamazoo area) posted the highest vacancy rate at 19.5% and also suffered by far the steepest annual vacancy drop, falling 12.5 points in 12 months. California’s Inland Empire recorded the sharpest increase in annual vacancy, doubling from 4.6% in January to 9.8% in December.

Quarterly net absorption slipped below zero for the first time in nearly seven years, totaling 431,000 square feet. Annual absorption totaled nearly 50 million square feet, down from 173 million square feet in 2007. The Greater Philadelphia market absorbed 9 million square feet in ’08, dethroning second-place Inland Empire, which had taken the top spot for the past four years running.

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