US industrial construction is having a good year, all things considered. A report from the consulting group of Cushman and Wakefield shows that the industrial market has produced a total of 159 million square feet in the last three consecutive quarters. The third quarter made 61 million alone, which is 16% higher than in the same quarter in 2019.
This relates to our previous reporting that one primary sector that has continued to grow despite the non-residential construction downturn is warehouses and distribution centers, buoyed up by an increasingly delivery and shipment-based purchasing base.
And despite pre-pandemic fears that new construction was outpacing current markets, the new industrial spending appears controlled, with a whopping 62% being speculative production, indicating that there is still a market for non-pre-planned purchasing. In the third quarter of 2020, new industrial construction contracts reached 250.3 square feet or an 8% increase over the same period in 2019. More than 90% of that was warehouse or delivery space.
These projects correlate to the small scale as well. In Chicago, for example, where Cushman and Wakefield are located, industrial construction has been doing great business during the epidemic. Fifty-two projects totaling 27.2 million square feet went up this summer, setting a new record for the area.
Leasing activity has also surpassed the leasing activity of 2019. As of the third quarter of 2020, 459 million square feet of new leasing activity was secured, outpacing the same period in 2019 by 5.4%.
All is not perfect, however, as vacancy rates have been creeping up. The report states that vacancy in the third quarter was over 5%, but they said it is not something to be concerned about at present.