Washington, D.C. Industrial Market Report

Rapid construction decline aids rebalancing of supply and demand. After more than 21 million square feet of inventory came to market from 2022 to 2024, openings will fall to just 3.2 million square feet in 2025. While soft demand will prevent vacancy tightening, this signals a realignment with pre-pandemic delivery norms and a considerable narrowing of recent disparities between new supply and tenant demand. With firms such as Amazon, DB Schenker and CertainTeed moving into spaces this summer and fall, marketwide fundamentals may be positioned to achieve balance for the first time since the health crisis. Slowing construction is proving particularly impactful in Hagerstown, which posted no notable openings in the three quarters ended in March. Inventory there expanded by nearly 40 percent between 2021 and the second quarter of 2024, leaving over 25 percent of the market’s vacant inventory in a single submarket. Excluding Hagerstown, vacancy in the metro stood at 7.3 percent in March — just 20 basis points above the national rate — indicating that most submarkets have stayed tighter than the metrowide figure suggests.