The logistics real estate market is progressing through a mini-cycle characterized by subdued demand and near-peak cyclical vacancy as excess capacity awaits post-election supply chain decisions.

Excess logistics facility capacity in the United States is limiting growth and is reflected in the IBI Utilization Rate coming in below normal levels at 84.4% in Q3, according to Prologis' November industrial report. Utilization started this year below 84% and climbed gradually as supply chains replenished. Absorption totaled 40 million square feet during the third quarter, down 34% from typical levels, said the report.

Subdued demand for new logistics real estate has persisted despite healthy GDP and consumption growth. The economy has experienced robust retail goods sales and inventory replenishment, which boosted activity in operational logistics facilities. The IBI Activity Index, which has hovered around 60 since June, reflects the steady movement of goods through facilities even as utilization and the inventory-to-sales ratio remained low by historical standards.