What market data supports projected absorption and lease-up for industrial space?

Market data is essential to justify and support projected absorption rates and lease-up timelines for industrial space, especially in brownfield or redevelopment projects. Lenders, equity partners, and regulatory authorities require this data to validate the commercial feasibility, revenue assumptions, and return profiles. Below are five categories of market data that typically underpin these projections:

1. Historical Absorption Rates in the Micro-Market

• Tracks past lease activity and volume (in sq ft. or acres) over 12–36 months within the target region.
  
• Measures how many units or how much floor space was absorbed per quarter or year.
  
• Helps establish a baseline rate of industrial space uptake under real conditions.
  
• Can be segmented by asset type (e.g., light manufacturing, warehousing, logistics) for precision.

2. Vacancy Levels and Inventory Pipeline

• Current vacancy rates provide a snapshot of market saturation or opportunity:
  
  • <5% s tight supply and faster lease-up potential.
    
  • 10% suggests slower absorption or overbuilding risk.
    
    
• Upcoming supply (planned or under construction) signals competitive pressure that may affect pricing or timing.
  
• Data sourced from local development authorities, industrial park operators, or CRE research firms.

3. Rental Rate Trends and Lease Tenure Benchmarks

• Tracks average asking and achieved rental rates (per sq ft./month) over time.
  
• Informs lease structuring assumptions in financial models (e.g., escalation, rent-free periods).
  
• Also identifies standard lease terms (e.g., 5+5 years, lock-ins, renewal rates) used by peers.
  
• Strengthens income projections for investors and lenders.

4. Tenant Demand Profiles and Industry Clusters

• Analyzes demand by sector—logistics, e-commerce, FMCG, auto, pharma, etc.—in the region.
  
• Studies occupier movements, expansion plans, and preferred corridors.
  
• Includes inquiry data or waitlist records from local brokers or park administrators.
  
• Helps match product design (e.g., clear height, dock ratios, floor load) with actual demand.

5. Comparable Project Performance (Comps)

• Uses benchmark data from similar industrial developments:
  
  • Lease-up time for the first 50% and full occupancy
    
  • Time to stabilize rents
    
  • Incentives or concessions offered
    
• Drawn from public filings, industry publications, or confidential broker insights.
  
• Enables realistic absorption pacing within 6–36 months, depending on phase, size, and location.