North America Industrial Construction Cost Guide 2023

C U S H M A N & WA K E F I E L D

KEY TAKEAWAY Even with all of the aforementioned construction likely outpacing tenant demand over the next few years, vacancy rates are expected to stay near historical lows. National U.S. vacancy is forecast to increase by 100-130 basis points in 2023, still a healthy level for the U.S. market.

National and Market Vacancy Rates: The majority of North American industrial markets currently have vacancy rates below 5.0%, including 73 U.S. markets, 11 Canadian markets and both markets in Mexico. In most cases, vacancies are considerably tighter than was experienced during the 2000s expansion. In fact, even if all of the space currently under construction (731 msf) across the Americas were to deliver without any of it being leased, region-wide vacancy would remain below 7.0%, and North American vacancy (U.S. & Canada) would still be 7.2%. • The ongoing tight market conditions and competition for space saw another quarter of rent growth in Q4 2022, increasing 18.6% YoY. At $8.81 per square foot (psf), Q4 2022 is the third quarter to eclipse $8.00 psf in U.S. industrial history. Asking rental rate growth will persist going forward. However, growth rates are projected to moderate compared to the double-digit growth rates observed in recent quarters as the pipeline brings more space to the market. There will be a flight to the quality space that comes online.

CURRENTLY UNDER CONSTRUCTION Markets with largest amount of square footage under construction (as of Q4 2022)

Under Construction UC as % of Inventory

20 30 40 50 60 70 80

12% 15% 18% 21% 24%

MSF

0% 3% 6% 9%

0 10

*Mexico as of Q3 2022 Source: Cushman & Wakefield Research

10 NORTH AMERICA INDUSTRIAL CONSTRUCTION COST GUIDE 2023