Average Industrial Sale Prices Continue to Escalate
The second quarter of 2022 is expected to be the seventh consecutive quarter to see an increase in the average sale price, according to the latest Yardi Matrix industrial report.
Report Highlights
- Industrial in-place rents averaged $6.53 per square foot in May, up 4.7 percent from the same time last year.
- Industrial vacancy nationwide clocked in at 4.7 percent in May, a 30-basis-point decrease from the previous month.
- National industrial transaction volume totaled $31.2 billion year-to-date in May.
- Some 656 million square feet of industrial space was under construction across the nation at the end of May.
National industrial vacancy stood at 4.7 percent as of May, down 30 basis points from the prior month. Heightened demand, combined with the scarcity of developable land drove vacancy rates in the Inland Empire, Los Angeles, Central Valley, New Jersey, Miami and Columbus well below the 3 percent mark.
Some 656.5 million square feet of industrial space was underway across the nation at the end of May, accounting for 3.8 percent of total stock. When taking into account planned projects, the rate is pushed to 7.8 percent of existing stock. With 58.7 million square feet underway representing 7.0 percent of total stock, Dallas leads the way in terms of construction activity.
Industrial rents on the rise
National in-place rents for industrial space averaged $6.53 per square foot in May, increasing by 4.7 percent on a year-over-year basis and five cents when compared to April. The largest increases over the last 12 months were recorded in Los Angeles (7.2 percent), Inland Empire (6.8 percent), Boston (6.6 percent) and Central Valley (6.1 percent).
The cost of a new lease in the last 12 months continued to be on the upswing, averaging $7.70 per square foot, $1.17 higher than the average rental rate. Port markets from Southern California continue to be the most sought-after, with Los Angeles ($3.96 difference), the Inland Empire ($3.80) and Orange County ($3.74) leading the way in this aspect.
Transactions Still Hot Despite Economic Uncertainty
Industrial sales totaled $31.2 billion in the first five months of 2022, with assets trading at an average of $132 per square foot. Transaction activity was highest in Houston ($2.6 billion), Chicago ($1.9 billion), Los Angeles ($1.8 billion) and Phoenix ($1.7 billion), while markets such as Cincinnati, Memphis and Portland ranked last on the list. According to Yardi Matrix, inflation and rising interest rates will alter the sales market in multiple ways going forward, but it is unlikely that pricing will slow down any time soon.
Read the full Matrix Industrial Report-June 2022
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