The US industrial sector is being hit by the global economic slowdown with occupied warehouse space shrinking by 18.1 million square feet in the last three months of 2008.
Warehouse vacancies stood at 9.1 percent, up 39 basis points from the end of the third quarter, and up more than 1 percent over the past year. According to a report by real estate services firm Colliers International, 42 markets in the US showed increased vacancy rates and just 12 markets with declining vacancy levels.
An increase in new supply contributed to rising vacancy rates with 46.5 million square feet completed during the fourth quarter, the highest quarterly injection into the sector. A total 171.9 million square feet of space was added to the US industrial sector in 2008.
New construction has though more or less ceased, with Colliers saying just 66 million square feet remained under construction as 2008 drew to an end. That figures is down from 107 million square feet at the end of the third quarter 2008. Approximately 75 million square feet of space is expected to be completed in 2009.
Average rental rates also softened, declining 1.5 percent to $5.51 per square foot during the quarter. The rate represents a 3.3 percent decline from one year ago.