Read the latest Yardi Matrix Industrial Market Report.
The average sale price for industrial properties rose 15.4 percent to $142 per square foot, according to the latest Yardi Matrix industrial market outlook.
Report Highlights
- National in-place rents for industrial space averaged $8.00 per square foot at the end of May, a 7.5 percent increase from May 2023.
- Nationwide industrial vacancy rose to 5.6 percent in May, a 40-basis-point increase from the previous month.
- Total industrial transaction volume amounted to $19.7 billion in the first five months of 2024.
- The under-construction pipeline encompassed 381.3 million square feet of industrial space as of May.
- Industrial sales year-to-date in May totaled close to $20 billion.
Industrial vacancy reaches 5.6 percent
In May, the national average rent for industrial space hit $8.00 per square foot, up 750 basis points from last year, according to Yardi Matrix data. This accounts for a 4-cent increase from April 2024. The Inland Empire led rent growth with a 12.6 percent increase, followed by Los Angeles (11.6 percent), Miami (11.4 percent) and New Jersey (9.6 percent). Phoenix, the fastest-growing non-port market, saw an 8.7 percent rise, nearly matched by Orange County (8.6 percent), while Seattle experienced an 8.2 percent year-over-year growth.
Meanwhile, the national industrial vacancy rate increased to 5.6 percent at the end of May, up 40 basis points from the previous month. Vacancy rates have been rising for over a year due to slowing demand and an influx of new supply. Columbus, Ohio, had the lowest vacancy rate at 2.7 percent, followed by Kansas City, Miss., and Nashville, Tenn., both at 3.8 percent.
The average rate for new leases signed in the past 12 months was $10.25 per square foot, $2.25 higher than the overall lease average. Miami had the highest premium for new leases, with tenants paying $5.55 more per square foot than the market average. Other notable premiums were seen in Los Angeles ($4.71), the Inland Empire ($3.56), Tampa, Fla. ($3.39) and Nashville ($3.26).
Active pipeline continues gradual decrease
At the end of May, 381.3 million square feet of industrial space was under construction nationwide, making up 1.9 percent of total stock, according to Yardi Matrix data. The active pipeline is shrinking due to fewer new projects starting and projects completions. Since the start of the year, 177.8 million square feet came online, while only 69.2 million square feet broke ground, marking the lowest new starts in the past decade.
The largest pipelines by percentage of stock were found in Phoenix (9.8 percent, 38.7 million square feet), Kansas City, Miss. (4.6 percent, 13.3 million square feet), Memphis, Tenn. (3.4 percent, 10 million square feet), Charlotte, N.C. (3.0 percent, 9.5 million square feet), Denver, Colo. (2.9 percent, 7.9 million square feet) and Columbus (2.7 percent, 8.5 million square feet).
Meanwhile, industrial investment year-to-date in May reached $19.7 billion. In 2024, the average national sale price of industrial properties reached $142 per square foot, up 15.4 percent from last year and 71.2 percent from 2019. This surge, driven by the pandemic, brought industrial prices closer to office property values ($165 per square foot).
Sales activity was concentrated in the Bay Area ($2.2 billion), Dallas-Fort Worth ($1.6 billion), Los Angeles ($1.5 billion) Chicago ($910 million) and New Jersey ($753 million).
Read the full Yardi Matrix Industrial Market Outlook: June 2024.
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