Industrial Sector Closes Record Year
Development and investment wrapped up a very strong 2021, as the sector was bolstered by strong demand.
- Industrial rents averaged $6.40 per square foot in December, a 1.8 percent increase from the same time last year.
- Industrial vacancy remained unchanged from November 2021, averaging 5.7 percent.
- National industrial transaction volume recorded a new high, totaling $71 billion at the end of December 2021.
- Nearly 322 million square feet of industrial space were delivered throughout 2021, significantly more than 2020’s total of $48.3 billion.
National industrial vacancy stood at 5.7 percent in December 2021, unaltered from the month prior. The Inland Empire had the lowest vacancy rate across the nation (0.9 percent), alongside other Southern California markets such as Los Angeles (2.8 percent) and Orange County (3.8 percent), port markets such as New Jersey (3.8 percent) and logistics hubs in the Midwest including Columbus (2.5 percent).
Asking industrial rents soar in Southern California
National rents for industrial space averaged $6.40 per square foot in December, increasing by 5.1 percent on a year-over-year basis. Rents soared in Southern California, particularly in the Inland Empire (6.3 percent growth), Los Angeles (6.2 percent) and Orange County (5.1 percent). The cost of a new lease in the last 12 months averaged $7.28 per square foot, 140 basis points higher than the average rental rate. The Inland Empire once again led the way in this sense: a new lease was 38 percent costlier than the $2.48 per square foot market average.
Industrial deliveries at the end of 2021 equaled to roughly 322 million square feet. However, the new stock volume is expected to surpass 2020’s total of 324.1 million thanks to a lag in collecting supply data, leading to a new record for industrial development. With 10.3 million square feet delivered in 2021 and 32.6 million square feet under construction—accounting for 11.8 percent of total stock—Phoenix emerged as one of the nation’s most promising industrial markets going forward.
Similarly, industrial transactions recorded a new high, totaling $71 billion at the end of 2021. Transaction volume was well over 2020’s figure of $48.3 billion. Meanwhile, average sale prices continued their upward trajectory, reaching $129 per square foot in December, 29 percent higher than in 2020. More than two-thirds of markets covered by YardiMatrix saw an increase in total volume compared to 2020, with Los Angeles ($2.9 billion more than 2020), the Inland Empire ($2.0 billion), Chicago ($1.8 billion) and Phoenix ($1.6 billion) leading the way in this sense.
Read the full Matrix Industrial Report-January 2022