There was continued weakness in the first quarter across North American industrial markets. The slowing has produced an overhang of newly delivered speculative logistics space, while rent growth has fallen to virtually nil.

In the United States, net absorption totaled 32.8 million SF in Q1, or 0.2% of the 19.3-billion-SF inventory. It was the lowest rate of tenant growth in more than a decade aside from the 17.6-million-SF contraction in Q2 following the U.S.’s initial tariff announcements.

The overall vacancy rate in Q1 settled at 7.5%, which has nearly doubled since 2022 as new supply exceeds demand. There was an 8.4% Q1 vacancy rate among 13.6-billion SF of logistics buildings, which account for 68% of the total industrial inventory in the U.S.

The U.S. industrial market has posted three years of weaker tenant demand. Net absorption last year was 122 million SF, less than half the pre-pandemic annual average. Over the last 12 months leasing volume, excluding renewals, has risen above the prior two-year average in only about a third of markets surveyed. Markets with the strongest rise in leasing activity include Gettysburg, Lancaster, Ann Arbor, Dover, Indianapolis, San Francisco, Worchester, Raleigh, Memphis, Miami and Philadelphia.. READ MORE >

A tenuous office recovery was underway in the first quarter across large parts of North America, led by improved tenant demand for premium space. But the gains in the United States and Canada have been uneven geographically and possible because inventory growth virtually has been absent for more than a year.

There were 3,381,725 SF of positive net absorption in the U.S. in the first quarter, which is weak by any historical measure. Nevertheless, it validated the surge in demand in the second half of last year when companies leased up a net 17,741,120 SF of Class A space. The recent gains brought a halt to the six-year Covid slide that totaled 215 million SF of negative net absorption, or 2.6% of inventory.

Performance across large cities in the last 12 months has been mixed, however. New York alone posted nearly 5.5 million SF of net tenant expansion, driven by robust office attendance and steady leasing by financial services firms. Dallas and Houston also posted net growth of 2.5 million SF and 1.8 million SF respectively, reflecting healthy population and economic growth. Notably, San Francisco saw more than 2 million SF of positive absorption in the opening phase of what surely will be a long, slow recovery from unprecedented vacancy. READ MORE >

There was continued easing in merchant demand across several North America in the first quarter. Nevertheless, strong fundamentals in the category reflect a generally healthy market.

North American retail space overall is tight. In the United States vacancy rates range from 2.7% for general retail to 9% among malls. In Canada, vacancies across all retail property types average close to 2.5%.

The retail property category – particularly neighborhood centers, strip centers and single-tenant buildings – has performed well for investors overall in the last decade and particularly since the pandemic. Rent growth has been healthy but lost steam recently amid growing economic concerns.

While other product types have seen steady demand, mall space in the United States and Canada remains out of favor. Tenants in North America have given up about 32.6 million SF of space since 2018. Approximately 7.2 million SF of mall space was shuttered in the last five quarters.

The U.S. retail sector generally has been facing a pronounced shortage of quality space. Construction activity remains near its lowest level in more than a decade, and supply additions remain minimal due to elevated development and financing costs. READ MORE >