Logistics warehouse vacancy rates across the U.S. will remain at or near historic lows during 2022, according to a report released Wednesday by Prologis Inc.’s research arm. The projections suggest it will once again be very difficult to procure space throughout the year.
Vacancy rates ended 2021 at an all-time low of 3.4%, despite 270 million square feet of supply entering the market. A record 410 million square feet was snapped up last year — 85% higher than 2020 levels — and about 400 million square feet will be spoken for this year, according to the report.
Of 390 million square feet of space now in the pipeline, 70% is pre-leased, according to the world’s largest developers and operators of logistics warehousing. Rents are expected to rise 10% in 2022 based on what the company (NYSE: PLD) called its “best case.”
The ongoing demand for e-commerce fulfillment services, combined with continued supply chain logjams, will keep current warehouse space filled to the max, Prologis said. Capacity will need to expand over time by at least 15% from current levels to accommodate normal inventory levels and build resilience against future disruptions. Supply chain disruptions are expected to persist into 2023, Prologis predicted.
The findings echo comments made last October by Chairman and CEO Hamad R. Moghadam at a company event. Moghadam said vacancy rates were at “unprecedented lows” in the wake of runaway demand for logistics warehouse space that has far outstripped capacity growth. In a well-publicized remark, Moghadam said that warehouse space in its markets was “effectively sold out.”