In a reversal from the ballooning logistics capacities required during the pandemic, demand for space has slowed across North America.  After continuously rebuilding inventories from the fall of 2021 through Q3 last year, many retailers and wholesalers are taking a breather, pausing further inventory accumulation out of caution over the economic outlook.   In the U.S., second-quarter net absorption was down 58% year over year, and 2023 is on track to post the weakest annual growth in more than a decade.  The vacancy rate was up 30 basis points from the first of the year to settle at 4.7%.  The recent slowing has been broad-based across most markets, but Los Angeles, the Inland Empire and Las Vegas recorded outsized increases in available space.

U.S. imports have fallen from record highs in November. The slowdown has been most pronounced at the Port of Los Angeles, where cargo traffic was affected by China’s Covid wave in late 2022 and early 2023. Additionally, until a tentative labor agreement was reached recently, there has been risk of a strike by West Coast dockworkers who have been working without a contract since 2022.  That risk was enough for many importers to divert cargoes to major East Coast ports such as Newark, Savannah, Norfolk and Charleston as well as Houston. READ MORE >


Tenants in the United States shed a record amount of space in the first half of 2023 and net absorption is on pace for its biggest annual loss ever, exceeding the negative 68 million SF in 2020, the first year of the pandemic.  Net absorption nationwide in the second quarter was negative 10.9 million SF, bringing the mid-year total to negative 39.7 million SF, as the internet and social distancing combined to dramatically alter the entrenched regimen of the office worker. While hybrid work has become a fixture in many companies, studies show that fully remote work has declined.

Canadian markets have held up better, although leasing volume in Canada this year was down 20% from a year ago and is half the pre-pandemic average. On a regional basis, conditions have been stronger in the Western markets of Vancouver and Calgary while activity in Toronto and Montreal remains depressed.

Top-quality buildings have seen consistently positive net absorption throughout the pandemic era.  So have newer buildings, completed after 2015. Leasing data shows that since the beginning of 2022, tenants have been taking nearly 10% less space since before the pandemic.  The U.S. market has contracted by 150 million SF over an unprecedented three straight years beginning early in 2020 when the vacancy rate was 10%, or 2% of total inventory.  The vacancy rate at the end of Q2 was 13.2% and short- and long-term pressures are lined up to drive it higher. For example, new leasing activity this year has been off 17% from its pre-pandemic average.  Also, about 67 million SF of new inventory – the most since 2009 – is projected for delivery by the end of the year. READ MORE >


Retail property is showing its overall resilience across North America with fundamentals so tight that the sector’s biggest challenge lately is satisfying pent-up demand.

The second quarter was the ninth straight quarter of positive net absorption in the U.S. Leasing activity has been declining lately, however. This year’s 18.2 million SF of net absorption through June is the least since 2020, the first year of the pandemic. Otherwise, most retail landlords have enjoyed steady growth, and the sector’s vacancy rate is at a record low 4.2%.  Merchants and landlords say leasing activity is being affected by supply- and demand-side factors. Lack of available supply in desirable locations is holding back growth while concerns over rising costs and uncertain economic outlook for consumption are affecting demand.

Most leasing activity remains concentrated in smaller spaces, less than 3,000 SF, and is being driven by growth in store counts from quick-service restaurant brands such as Starbucks, Crumbl Cookies, Yum Brands and Restaurant Brands International, which owns BK, Tim Hortons, Popeyes and Firehouse Subs. T-Mobile and AT&T also have leased dozens of small shop spaces over the past year. READ MORE >


Healthy demand for apartments in the U.S. rebounded in the second quarter after falling flat last summer. But with supply outpacing net absorption for six straight quarters and a historic volume of apartments under construction the outlook tilts decidedly in the tenant’s favor.

There were 184,935 units rented in the first half of 2023, 24% more than last year, with 140,139 units absorbed in the second quarter.  The strong quarterly showing puts absorption for 2023 on track to exceed the five-year pre-pandemic annual average by 15%.

The increased inventory of available units has put downward pressure on rents.  Nationally, rent growth through the second quarter this year averages 1.1%, the lowest since 2020.

The strong second-quarter demand is a reversal from the weak net absorption going back to last summer.  Net absorption only totaled 28,920 units in the second half of 2022 and Q1’s growth totaled 44,796 units, well below the 82,000 quarterly average for five years prior to the lockdown. READ MORE >