New spec results in big box vacancy rate jump
The completion of eight vacant big box speculative construction projects combined with several new vacancies in second generation space added 6.2 million square feet of vacant space to the market during the third quarter of 2017 and pushed the overall big box vacancy rate up 187 basis points to 9.58 percent. This rate is now 239 basis points above the 7.19 percent rate recorded a year ago during the third quarter of 2016.
Despite this significant jump, net absorption was slightly positive during the quarter, totaling 269,218 square feet. Two build-to-suit completions combined with nearly 1.3 million square feet of new leasing activity to offset the effects of new vacancies in existing buildings, as vacant speculative deliveries have no impact on net absorption.
Active big box construction activity totals 9.1 million square feet among 12 buildings, 70 percent of which is being built on a speculative basis. Five of these projects are greater than 1.0 million square feet, three of which are speculative.
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