Metropolitan Industrial Vacancy Rates August 2009
Vacancy rates are significant indicators of the prevailing demand-supply balance in the local industrial market. Very low vacancy rates tend to reflect very little or no excess supply of industrial space in the local market, while the risk of oversupply is considerably greater in markets with high vacancy rates. Within this context, when evaluating metropolitan industrial markets for investment targeting puproses, vacancy rates provide important summary information regarding relative market tightness. San Francisco, Salt Lake City, Seattle, Cleveland, and Portland (in ranking order) complete the list of the 10 industrial markets with the lowest vacancy rate, with the first three posting average vacancy rates between 10.2% and 10.9% and the last two posting average vacancy rates between 11% and 11.1%. It should be noted that NAR/TWR reported a national industrial vacancy rate of 13.6% in August 2009. The metropolitan area with the highest industrial vacancy rate, averaging 20.8%, was Detroit, followed by Phoenix and Stamford with average vacancy rates of 18.6% and 18.3%, respectively. Atlanta and Boston, with average vacancy rates of 17.9% and 16.9%, respectively, complete the list of the five markets with the highest vacancy rates in the industrial/warehouse segment. Columbus, Austin, Sacramento, Baltimore, and Riverside (in ranking order) complete the list of the 10 markets with the highest industrial vacancy rate in August 2009, with the first four posting vacancy rates ranging between 16.2% and 16.7% and Riverside posting an average vacancy rate of 15.9%.
It should be noted that the national industrial vacancy rate increased compared to May 2009 when NAR/TWR reported an average rate of 12.8%.
The graph below describes the changes (in percentage points) in average vacancy rates across metropolitan industrial markets between May 2009 and August 2009, based on the data provided by NAR/TWR for these two periods. The negative change indicates a decreasing vacancy rate, while the positive change a rising vacancy rate.
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