U.S. companies leased 132 million square feet of warehouse space in 2022’s final quarter, 28.2 percent less than in the third quarter, real estate services firm Cushman & Wakefield reported.

The pace of leasing also dropped in the third quarter from the second.

The warehouse vacancy rate moved up from 3.1 percent in the third quarter to 3.3 percent in the fourth, the second consecutive quarterly increase.

Through all of 2022, businesses leased 18 percent less warehouse area than in the year previous.

Logistics companies and mass retailers are pulling back as inflation cuts consumers’ buying power and amid a global economic slowdown and fears of a looming recession.

“After the extreme acceleration we saw in the past couple years, there’s a natural cooling now,” Carolyn Salzer, Cushman & Wakefield’s chief Americas logistics researcher.

Companies snapped up warehouse space at a record clip during the COVID-era lockdown, when people spent their time buying goods online.

The need for more warehouse space waned last summer as consumers vented the last of their pent-up demand from the COVID era, inflation shrank household budgets, and overstocked retailers cut or halted orders for new merchandise. 

Amazon had more than doubled its warehouse space since 2019; now it has announced it will lay off at least 18,000 workers.

With 682 million new square feet of warehouses under construction, the market is headed for a glut, Salzer warned. 

“It’s a concern,” she said, especially in the Northeast and West, where leasing has slowed the most.

However, developers already have been scaling back their plans: in the fourth quarter, 4.3 percent less warehouse space was being built than in the third, Salzer noted.

TREND FORECAST: All of this and more is a sign of recession ahead. Indeed, if there was economic growth on the near horizon, warehouse space demand would be on the increase.