Interest rate hikes by central banks aiming to tame inflation and tenants battling supply-chain and other issues continue to slow industrial demand across the United States and Canada.

One difference between the two neighbors, though, is consumer behavior on discretionary spending. When Canadians shut their wallets as the Bank of Canada began raising rates in 2022, the buying habits of U.S. households hardly changed. The Commerce Department reported that Americans closed out 2023 with a 2.8% increase in personal consumption spending. Fortunately, the relative overall health of labor markets, household incomes and business margins have most observers expecting only cooling but not contracting economies.  But a 12-year low in U.S. home purchases hit the sales of furniture, appliances and building materials. Bed, Bath & Beyond closed 360 locations. HomeGoods, Home Depot and tile maker Daltile closed distribution centers larger than 500,000 SF in Q1. On the plus side, Burlington Coat Factory, TJX Companies, Chuck and Dwight and Nestle USA all have signed leases larger than 700,000 SF this year.

Tampa, Jacksonville, Lehigh Valley and Detroit have bucked the national trend by recording tightening availability rates over the past 12 months. Speculative construction in Lehigh Valley and Detroit have gained from the growth of manufacturing tenants and distributors. Jacksonville and Tampa have been direct beneficiaries of diverted Asian imports through the Panama Canal to East Coast and Gulf Coast ports. READ MORE >


First-quarter net absorption of office space in the United States was negative 26.8 million SF, as the Covid correction continued into its fifth year. In contrast, office demand in Canada has been modest and overall positive since 2000. Canada’s strong first-quarter 2.3-million-SF expansion fell just short of equaling positive totals in each of the last two years.  In both countries, however, office attendance has been stagnant. By most broad measures, workers across in the U.S. and Canada generally are in the office about half as much as pre-Covid.

Despite a strong economy and job growth, cost-cutting has been a theme in recent corporate earnings reports. Underutilized office space has been viewed as an opportunity for savings.

The Q1 vacancy rate in the U.S. increased to 13.8% in Q1 from 13.5% at the end of 2023. There was 60.7 million SF of negative net absorption in 2023, the fourth straight year with growth in the red. Since the pandemic struck in Q1 2000, vacant space in the U.S. has increased 275.9 million SF as return-to-office initiatives have failed to gain traction.

Cumulatively, the amount of occupancy lost since 2020 is four times what was recorded during the Great Recession and three times greater than the dot-com bust in 2001. Although down somewhat from the peak in mid-2023, there are 203 million SF available for sublease, over half of which are vacant. Second-hand space is nearly twice the total at the end of 2019. READ MORE >


Prolonged merchant demand for space, fewer store closures and bankruptcies and a limited available supply have combined to produce the tightest retail market on record in the United States and Canada, as vacancies reach all-time lows.

Canada’s first-quarter vacancy rate was 1.6%, which was unchanged from the previous quarter despite reduced consumer discretionary spending. But an appetite for cars, appliances and personal indulgences has kept inventories of big-ticket items low.

The U.S. vacancy rate settled at 4.1% at the end of Q1, up slightly from 4% at the close of 2023. Demand for U.S. retail space rose by more than 53 million SF in 2023, the third straight year of growth. Since early 2020, there has been more than 175 million SF of net expansion. At the close of 2023 only 4.8% of retail space was available, the lowest level on record.

Most of the growth in demand for space has been driven by tenants from food-and-beverage, discount, off-price and experiential sectors, which accounted for more than half of all new leasing activity over the past year.  Retail tenants in the food-and-beverage sector accounted for nearly 20% of all leasing activity last year. The bulk of leasing activity is concentrated in spaces of 3,000 SF or less and overwhelmingly driven by growth from quick-service restaurants. Leading tenants Starbucks, Crumbl Cookies, Yum Brands and Restaurant Brands International, which owns Burger King, Tim Hortons, Popeyes and Firehouse Subs, all signed for dozens of new locations over the past year. READ MORE >


Rising consumer sentiment and moderating inflation has fueled a timely overall rebound in United States apartment demand. Nevertheless, supply outpaced demand for the ninth straight quarter, but that is set to change. In Canada, meanwhile, an acute housing shortage, which has produced double-digit rent growth, has caused the federal government to eliminate the 5% Goods and Services Tax on new rental units and offer other incentives to stimulate apartment development.

In the U.S., healthy net absorption of 423,409 units in the last five quarters, including Q1, was overwhelmed by 724,942 new apartments added to the supply. During the same period the nationwide vacancy rate has risen from 6.5% to 7.8%.

There are 20% fewer completions scheduled in 2024. The 142,219 apartments added in the first quarter followed the record high in annual deliveries of 582,723 units in 2023. Nationally, the forecast shows rent growth acceleration for the first time since 2021 and positive rent growth returning to all but a few markets by the end of 2024.

At the market level, nine of the 10 strongest rent growth metros in 2023 were in the Midwest and Northeast.  But rents rose fastest in Orange County, California, up 3.9% year over year, followed by Louisville, Kentucky, Northern New Jersey, Cincinnati and Chicago at 3%.  Houston, Miami, Memphis, Oklahoma City and Tucson were the only five major Sun Belt markets to post positive year-over-year rent growth at the end of 2023 as Sun Belt markets largely reported significant overall slowing in rent growth and demand. Many markets experienced falling rents, including Austin and Orlando at 5.1% and 4.8 respectively. READ MORE >