North America Industrial Construction Cost Guide 2023

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

INDUSTRIAL MARKET UPDATE Growth in Industrial Demand: The industrial sector has been among the winners in the wake of the pandemic. Skyrocketing e-commerce demand—along with focus on improved supply chains and increased interest in manufacturing onshore—has driven North American industrial demand over the past three years. In the U.S. alone, over 1.3 billion square feet (bsf) was absorbed between 2020 and the end of 2022. That is 56% higher than the next best three-year period (2017-2019) and is 100 msf larger than all of the industrial space in the Americas’ largest market, Chicago. Looking forward, e-commerce demand may be easing but retail, manufacturing, battery manufacturing and storage, semiconductor manufacturing and specialty use demand is replacing it.

KEY TAKEAWAY Record demand has driven sub-4% vacancy rates across the region. As of Q4 2022, the national Canadian vacancy rate was 1.4%, the U.S. 3.3%, and both Mexico City and Monterrey, Mexico were below 3%. As vacancy has grown tighter industrial asking rents have increased. In Q4 2022, U.S. asking rents were up 18.6% YoY and up 38% since the beginning of the pandemic. Canadian asking rents have increased even more substantially: up 45% YoY and 81% since Q4 2019. Latin American rents are down from pre-pandemic highs but have increased by 12% YoY.

STRONGEST 3-YEAR PERIODS OF NET ABSORPTION (MSF)

#1 1,336 MSF

600

500

400

#2 854 MSF

#4 721 MSF

#5 684 MSF

#3 838 MSF

300

200

100

0

Source: Cushman & Wakefield Research

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CUSHMAN & WAKEFIELD