The U.S. industrial vacancy rate is beginning to plateau as the new supply of industrial properties begins to fall.

That’s one of the key findings in Colliers’ third quarter 2024 national industrial report.

According to Colliers’ research, the average industrial vacancy rate in the United States climbed by 19 basis points to 6.6% in the third quarter of this year.

That is an increase, but it’s a small one. Colliers reported that last quarter’s increase in vacancy rate was the smallest quarterly jump since the industrial vacancy rate began to increase in the latter months of 2022.

Part of this is because of the slowdown in new industrial supply. According to Colliers’ numbers, new industrial supply totaled 76 million square feet in the third quarter. That is the lowest since early 2021 and 54% below the 163 million square feet of industrial space delivered during the third quarter last year.

Tenants are still claiming industrial space. Colliers reported that net industrial absorption across the United States totaled 39 million square feet in the third quarter. That brings the year-to-date amount of U.S. industrial absorption to 115 million square feet.

Expect a continued slowdown in new industrial construction. Colliers says that the development of new U.S. industrial space has decreased by 53% since its peak in 2022. New development will fall below 300 million square feet by early 2025.

While the U.S. industrial market is no longer in its boom phase, Colliers did report that 35 tenants across the country moved into spaces of 500,000 square feet or larger during the third quarter. Nearly half of these tenants were third-party logistics providers or packaging users.

What U.S. industrial markets performed well during the third quarter? Houston saw more than 5.7 million square feet of net absorption to lead the country, while Dallas-Fort Worth ranked second with more than 5.5 million square feet.

Chicago ranked second in the country for total inventory with 1.5 billion square feet of industrial space on the market. Chicago also saw its industrial vacancy rate fall to 4.9% during the third quarter down 29 basis points.

The Dallas-Fort Worth market had 1.1 billion square feet of industrial inventory as of the end of the third quarter.