Industrial Market Real Estate Trends

U.S. Industrial Market Outlook – November 2023

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The national industrial vacancy rate remained relatively constant, staying at 4.6 percent as of the end of October, according to the latest Yardi Matrix industrial report.

Report Highlights

  • National in-place rents for industrial space averaged at $7.56 per square foot at the end of October, a 7.6 percent increase from October 2022.
  • Nationwide industrial vacancy remained unchanged from the previous month and averaged 4.6 percent in October.
  • Total industrial transaction volume amounted to $44.4 billion at the end of October.
  • The under-construction pipeline featured 512.5 million square feet of industrial space as of October.

Rents soar in SoCal amid stable vacancy

The average in-place rents for industrial space nationwide was $7.56 per square foot at the end of October. This represented a significant year-over-year increase of 760 basis points, coupled with a slight uptick of 5 cents compared to the prior month. Southern California emerged as a dominant player, witnessing substantial growth in rental rates over the past year. Notably, the Inland Empire experienced a remarkable surge, with rents recording a substantial 15.2 percent increase. Orange County, Calif., and Los Angeles closely followed suit with rent hikes of 12.8 percent each.

In contrast, the national industrial vacancy rate remained relatively consistent, holding steady at 4.6 percent by the end of October. A detailed examination of specific regions in California showcased some of the lowest vacancies, with the Inland Empire at 4.3 percent, Orange County at 4.6 percent, and the Central Valley at 5.0 percent. Additionally, Miami, Bridgeport, Conn., and Phoenix reported low vacancy rates of 4.3 percent, 3.2 percent, and 2.4 percent, respectively.

Active pipeline continues to boom

As of October, a total of 512.5 million square feet of industrial space was under construction, constituting 2.7 percent of the total stock. While the overall volume of new construction holds historical significance, a noteworthy concentration is evident in specific markets. Precisely, over 25 percent of the under-construction supply is concentrated in just five markets, with the top 18 markets accounting for half of it.

Notably, Phoenix takes the lead with an impressive 47.3 million square feet underway, surpassing Dallas, the second most active market with 42.4 million square feet in progress as of October. The Inland Empire secures the third spot, boasting an active pipeline of 25.7 million square feet of industrial space.

Meanwhile, industrial investment year-to-date in October reached $44.4 billion, with properties trading at an average of $131 per square foot. Sales activity was concentrated in the Inland Empire ($3.7 billion year-to-date through October), Los Angeles ($3.5 billion), Dallas-Fort Worth ($2.4 billion), the Bay Area ($2.3 billion), as well as New Jersey ($2.2 billion).

Read the full Matrix Industrial National Report-November 2023.

About the author

Corina Stef

Corina Stef started her tenure as a music journalist a decade ago and has been occupying a full-time real estate editor and blogger position since 2017. She is a senior associate editor with Commercial Property Executive and Multi-Housing News who focuses on commercial real estate trends and in-depth stories.

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