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US Industrial Development Starts the Plunge in the Fourth Quarter

Inflation and the higher interest rates accompanying it have finally begun to curtail the largest commercial real estate construction boom by square footage recorded for any property type in the U.S. since the 1980s.

About 134 million square feet of U.S. industrial property development began construction during the final three months of 2022. This marked a steep drop of almost 40% from the quarterly tally averaged during the preceding 12 months, and was the lowest quarterly construction-starts total recorded since the initial outbreak of the Coronavirus in early 2020.

This pullback in development activity does not appear to be a response to changes in tenant demand for industrial space, which has proven relatively resilient in recent months. U.S. industrial leasing totaled roughly 275 million square feet during the fourth quarter of 2022, a decline of just 8% from the strongest fourth-quarter leasing tally ever recorded just one year earlier in 2021.

*Article courtesy of Costar

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