The U.S. industrial property market capped off a solid year with a strong fourth quarter, according to a report issued today by real estate and logistics services giant Jones Lang LaSalle (JLL). Steadily rising tenant demand, combined with "generally measured" construction deliveries, drove vacancy rates below levels last seen in 2007 prior to the Great Recession, the report said.

Average 2014 "asking rents" for warehouse and distribution center, manufacturing, transportation, and logistics space rose 4.5 percent from 2013 levels. Rents are nearing the last cycle's highs reached about 10 years ago, and further increases are expected in 2015, according to the firm's industrial outlook.

The industrial vacancy rate in the fourth quarter stood at 6.9 percent, down a full percentage point from the same period a year ago, JLL said. Net absorption, defined as the amount of occupied space less the amount of space vacated, was positive for the 19th consecutive quarter with 61.2 million square feet. Net absorption for the year hit 219 million square feet, up 30 percent from 2013 and ahead of the firm's original projection of 185 million square feet, the report said.

Vacancy rates in 2015 are expected to narrow as much as another one-half percentage point to 6.4 percent, the report said.

New deliveries, a barometer of construction activity, totaled 142.1 million square feet, up 56.5 percent from 2013, the report said. Although new deliveries may hit 171 million this year, they are still below the last cycle's annual average of 184 million square feet.

Speculative construction, which ground to a halt during and after the Great Recession before finally perking up, rose 12.3 percent in the fourth quarter compared to the prior quarter. Despite the gains and the fact that "new groundbreakings are not showing any signs of letting up" nationwide, the market shows few signs of overheating, the report said.

JLL said the story of the year was the Southeast, which had lagged the rest of the country's recovery, which has been underway for four to five years. Annual net absorption for the Southeast hit 47.9 million square feet, up 85 percent from 2013 levels. Much of the gains, the report said, were fueled by activity in Atlanta, where annual absorption figures were more than double 2013's totals and vacancy rates were reminiscent of the late 1990s when the metro area reported significant population gains and demand for space was strong across a wide range of industries, especially high tech and telecommunications.

Of the 50 markets that JLL surveys, Atlanta ranks second only to California's Inland Empire in construction activity.