More than 713 million square feet of industrial space was under construction nationwide at the end of October, according to the latest Yardi Matrix industrial report.
Report Highlights
- Industrial in-place rents averaged at $6.95 per square foot in October, a 6.2 percent increase from the same period last year.
- New leases averaged $8.49 per square foot, or $1.54 more than the average in-place lease.
- Nationwide industrial vacancy averaged 4.0 percent at the end of October.
- Total industrial transaction volume amounted to $71.9 billion year-to-date in October.
- A little over 713 million square feet of industrial space was underway across the nation as of October.
Nationwide industrial sales totaled $71.9 billion at the end October, with transaction activity becoming more tempered in the second half of this year. As of October, the average sales price of an industrial asset was $128 per square foot. Sales activity was concentrated in Los Angeles ($4.4 billion year-to-date), the Inland Empire ($4.1 billion), Dallas ($4.0 billion) and Houston ($3.7 billion).
Meanwhile, some 713.6 million square feet of industrial space was under construction nationally, accounting for 4.0 percent of total stock. Phoenix had the largest pipeline in the country on a percentage-of-stock basis (15.6 percent, 46.6 million square feet) and benefited from overflow because of its proximity to the ports of Los Angeles and Long Beach, Calif. Dallas (7.8 percent, 66.7 million square feet) and Indianapolis (7.4 percent, 24.2 million square feet) followed closely.
Industrial vacancy rate contracts amid record-breaking rents
National in-place rents for industrial space continued their upward trajectory, reaching an average of $6.95 per square foot in October and increasing by 620 basis points on a year-over-year basis. The highest gains were present in port markets and nearby markets benefitting from spillover demand. The Inland Empire had the most notable growth rate (11.6 percent year-over-year change), followed closely by Los Angeles (9.7 percent), Boston (8.9 percent) and Phoenix (7.6 percent).
The cost of a new lease in the last 12 months averaged $8.49 per square foot in October, $1.54 more per foot more than the average rental rate. The spread between the average lease rate and cost of a new lease was highest in Los Angeles, with the average lease signed was $6.10 more per foot than the average in-place rent. New leases cost $5.60 more per square foot in the Inland Empire and $4.17 more in Orange County.
National industrial vacancy was 4.0 percent in October, a 10-basis-point decrease from the month prior. The Inland Empire had the lowest vacancy rate in the country (1.0 percent), closely followed by port markets such as Los Angeles (2.1 percent) and New Jersey (2.4 percent), as well as Midwestern logistics hubs including Columbus (1.6 percent) and Indianapolis (2.5 percent).
Read the full Matrix Industrial Report-November 2022
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