Memphis Industrial Market Report

Supply and demand both contract relative to recent norms. The local industrial sector is experiencing a transition period as developers and tenants each respond to a post-pandemic normalization in consumer behavior. Spurred by an online shopping boom and international supply chain snarls during the health crisis, inventory additions from 2020-2023 totaled 38.6 million square feet, met with net absorption of roughly 35.7 million square feet. Now in 2024, supply additions and net absorption each decline to decade-plus lows. The reduction in demand will be slightly more extreme than the slowdown in construction, however, resulting in a second straight annual vacancy increase. Nevertheless, the rate holds nearly 300 basis points below the metro’s long-term mean, allowing the average asking rate to remain on an upward trajectory after ranking fourth among major U.S. markets for rent growth last year. Marshall County and Northeast Memphis have been the most resistant to the ongoing slowdown, each registering vacancy drops last year. Marshall County’s access to Interstate 22 and Northeast Memphis’ proximity to Interstate 40 reinforce tenant demand.