Net absorption during first quarter held positive and remained on par with the previous quarter with more than 684,000 sf of net occupancy gains. Overall vacancy fell 40 bps from the previous quarter to 1.6% at the close of the first quarter. Vacancy also held steady from this time last year despite nearly 5.4 million square feet (msf) of new industrial inventory added during the one-year period. No major completions took place during the start of 2023 and tight market conditions persisted with limited space options throughout the county.
- Developer Confidence Still Bullish
3.7 MSF was under construction at the close of Q1 with nearly 6.0 MSF of planned projects beginning site preparation to commence construction.
- Vacancy Remained Tight
Vacancy fell to 1.6%, holding below the 2.0%-mark as new inventory is rapidly leased up, keeping vacant space options limited.
- Demand Fell From Robust Levels
Just over 804,000 SF of industrial space was leased in Q1, 25.6% lower than the previous quarter, as demand returned to normalized levels amidst the lack of available space.
- Asking Rents Soared
Overall industrial rents hit $13.83 PSF NNN in Q1, up 35.0% YOY with warehouse/distribution space at $13.83 PSF, 40.3% higher than one year ago.
- Absorption Gains Remain Stable
More than 684,000 SF of positive net absorption was recorded in Q1, on par with 4Q22. While move-ins to new product should hold strong throughout 2023, they will likely not reach the record-shattering levels of 2021-2022.