Robust Leasing Brings Increased Big Box Development
New leasing activity totaled a robust 16.4 million square feet in modern big box buildings greater than 200,000 square feet during 2018, the greatest annual total of the current cycle. However, the three largest new leases signed during the year - totaling 2.1 million square feet - were build-to-suit transactions in buildings under construction. This activity, combined with a few preleases in planned or under construction speculative facilities will not impact the big box vacancy rate or net absorption until the buildings are delivered.
Over the course of 2018, the big box vacancy rate decreased by 57 basis points to 9.07 percent, falling most significantly during the first half of the year before rising by 5 basis points during the fourth quarter due to large new vacancies being introduced and the delivery of 2.1 million square feet of vacant speculative construction activity.