While industrial property sales volume fell after interest rate hikes, the average sale price increased by 7.7 percent to $134 per square foot in April, the latest Yardi Matrix industrial report shows.
Report Highlights
- National in-place rents for industrial space averaged at $7.18 per square foot at the end of April, a 7.3 percent increase from the same time in 2022.
- Nationwide industrial vacancy averaged 4.1 percent in April, up 20 basis points from the previous month.
- Total industrial transaction volume amounted to $12.6 billion at the end of April.
- The average price for industrial properties stood at $134.10 per square foot, up 7.7 percent from the same period last year.
- The under-construction pipeline featured 616.4 million square feet of industrial space as of April.
Industrial Property Sales: Volume Drops, Prices Rise
Industrial sales across the U.S. totaled $12.6 billion at the end of April, the latest Yardi Matrix industrial report shows. Investment activity was concentrated in the Inland Empire ($1.7 billion year-to-date through April), the Bay Area ($802 million) and Los Angeles ($783 million). Meanwhile, the average sale price of an industrial building was $134.10 per square foot at the end of April, a 770-basis point increase from the same time in 2022, when it stood at $124 per square foot.
The current mark is considerable, although it is noticeably lower compared to previous years. The average sale price experienced a significant rise of 26.6 percent from 2020 to 2021, and a further increase of 13.7 percent from 2021 to 2022.
A total of 616.4 million square feet of industrial space was under construction across the nation at the end of April, accounting for 3.4 percent of total stock. Industrial deliveries in the first four months of 2023 totaled 162.4 million square feet. Dallas-Fort Worth emerged as the top contender in terms of industrial deliveries this year, featuring 17.6 million square feet of new space. This is over twice the amount of the second-ranking market, Indianapolis, which added 8.3 million square feet to its inventory in the same timeframe.
Demand still hot in Southern California
National in-place rents for industrial space averaged $7.18 per square foot in April, increasing by 730 basis points on a year-over-year basis and three cents when compared to March. Port and nearby markets recorded the highest increases, led by the Inland Empire (18.2 percent year-over-year change), Los Angeles (12.3 percent), Boston (9.7 percent), Orange County (8.0 percent) and Phoenix and Bridgeport, respectively (7.8 percent).
The average cost per square foot for new leases signed within the past year continued to rise, reaching $9.58 per square foot at the end of April. The amount was $2.40 more than the average for all leases. Rates were highest in Los Angeles ($19.72 per square foot), Orange County ($18.19 per square foot), the Inland Empire ($16.60 per square foot) and the Bay Area ($14.87 per square foot).
Industrial vacancy nationwide stood at 4.1 percent at the end of April, a 20-basis-point increase from the previous month, the latest Yardi Matrix industrial report shows. The lowest vacancy rates in the country were found in Columbus (1.7 percent), the Inland Empire (1.9 percent), Los Angeles (2.0 percent) and Charlotte (2.4 percent).
Read the full Matrix Industrial National Report-May 2023.
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