Industrial Market Real Estate Trends

Industrial Real Estate Market Trends (February 2022)

Industrial Real Estate Market Trends February 2022
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Average Sale Prices, Rents Continue Steady Climb

The U.S. industrial sector is driven by strong shipping volumes in the nation’s ports.

Report Highlights

  • Average industrial rents clocked in at $6.46 per square foot in January, up 4 percent from the same time in 2021.
  • Industrial vacancy averaged 5.5 percent, decreasing by 20 basis points from December 2021.
  • National industrial transaction volume topped $3.6 billion at the end of January.
  • Average sale prices reached $135 per square foot in January.

National industrial vacancy was down by 20 basis points compared to December 2021, reaching 5.5 percent in January. Southern California continued to post tight industrial vacancy rates, with Inland Empire (0.9 percent) leading the way in this sense. Vacancy rates were also low in Midwestern logistic hubs including Columbus (1.3 percent) and Indianapolis (2.6 percent).

National rents for industrial space averaged $6.46 per square foot in January, increasing by 4 percent on a year-over-year basis. Meanwhile, a new lease signed in the last 12 months averaged $7.32 per square foot, or 13.3 percent more than the national average rate. The largest differences between new and existing leases occurred in Orange County ($3.34 more per foot), followed by the Inland Empire ($2.67) and Boston ($2.24).

Development concentrated within logistics hubs

Some 587.8 million square feet of industrial space was under construction across the nation at the end of January, accounting for 3.5 percent of total stock. Including planned projects, the pipeline amounts to 7 percent of total inventory. Construction activity soared in popular logistics hubs such as Dallas (38.8 million square feet underway), Phoenix (35 million square feet) and Indianapolis (29 million square feet).

Transactions off to a good start

Investment transactions amounted to some $3.6 billion in the first month of 2022, not counting a lag in collecting sales data. According to Yardi Matrix data, 400 properties changed hands at an average sale price of $135 per square foot. This represents a 13 percent increase from the fourth quarter last year, when industrial properties traded at an average $119 per square foot.

Transaction activity was concentrated in New Jersey, where $375 million worth of industrial assets traded in January alone at an average of $237 per square foot—the third-largest average sale price in the nation.

Read the full Matrix Industrial Report-February 2022

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Corina Stef

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