Abstract
While the national average vacancy rate may be increasing, investors looking for big-box buildings with limited modern competition will find exceptions to the national average in many markets.
Averages Hiding Investor Opportunities
The national vacancy rate is hiding multiple markets with limited modern big-box availabilities.
BETTER THAN AVERAGE
Investors buy individual buildings, in individual markets, of individual sizes, not the national average vacancy rate.
As a result, while the national vacancy rate provides a valuable perspective on national trends, it is hiding investor opportunities.
For example, despite vacancy rising nationally, in 15 markets, tenants have a single +/- one million square feet (MSF)modern logistics space* to choose from.
This is even after generously expanding the threshold to 970,000 SF to capture near 1M SF buildings.
If a strict 1M SF+ threshold were used, Chicago and Greater Philadelphia would have no 1M SF+ availabilities.
While the national average vacancy rate may be increasing, investors looking for buildings with limited modern competition will find exceptions to the national average in many markets.
EXCEPTIONAL EXAMPLES
There are notable markets with only one or two 1M SF+ availabilities in modern logistics buildings.
Demand heightens the scarcity: Columbus has four requirements needing 1M SF+, but only two1M SF+ availabilities.
Investors can also find favorable supply-demand dynamics in markets with multiple +/- 1M SF+ availabilities.
In the I-78/81 Split submarket, there are 21 1M SF+ requirements, but only eight +/- 1M+ modern logistics spaces available.
Atlanta has 10 availabilities +/- 1M SF+, but four will be leased by year’s end, and only three of the remaining six are 40’ clear.
Dallas also has 10 availabilities, with three in lease negotiations, leaving only seven, which is how many 1M SF+ leases were leased in 2024.
Scarcity could increase further given that the number of +/- 1M SF+ buildings under construction has declined to eight, assuming sustained demand.
*Includes buildings built since 2015 or under construction, 970,000 SF and greater, and 30’ clear.
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