After years of rapid growth, the industrial market became imbalanced last year, with new development far outpacing occupancy gains.

A record 607M SF of new industrial projects delivered across the country last year, while the U.S. saw 231M SF of positive net absorption, according to Colliers' Q4 2023 Industrial report. Nationwide vacancy rose by 194 basis points to 5.5%, the highest rate since 2016.

"New supply nearly tripled demand, as measured by net absorption during 2023, pushing vacancy higher in every region of the country and across nearly all industrial markets," the report says.

The five largest industrial markets all saw spikes in vacancy: Greater Los Angeles' vacancy rate rose 256 basis points to 3.4%, Chicago's rose 75 basis points to 5.3%, Dallas-Forth Worth's rose 335 basis points to 8.5%, New York City's rose 183 basis points to 4.7% and Atlanta's rose 290 basis points to 6.6%.

Though Dallas-Fort Worth saw some of the biggest vacancy rate increases, it also had the most positive net absorption with 28M SF and the most product under construction in Q4 with 40M SF.

The fastest-growing markets in the country included Savannah, which saw 17% supply growth last year, followed by Charleston at 14.7% and Austin at 13%.

However, slowing construction starts should help bring supply and demand back into balance, Colliers' report said: 80M SF of new projects started during the second half of 2023, down 76% from the same period in 2022.