The average new lease rate over the past year was $10.30 per square foot, exceeding the overall lease average by $2.08, according to the latest Yardi Matrix industrial market outlook.
Report Highlights
- National in-place rents for industrial space averaged at $8.22 per square foot at the end of October, a 6.1 percent increase from October 2023 and 6 cents more than the month prior.
- Nationwide industrial vacancy recorded a 20-basis-point uptick from the previous month and averaged 7.2 percent at the end of October.
- The under-construction pipeline featured 358.8 million square feet of industrial space as of October.
- Total industrial transaction volume amounted to $49.2 billion year-to-date in October.
Industrial rents climb, vacancies rise to 7.2 percent
In October, the national average rent for industrial space climbed to $8.22 per square foot, a six-cent increase from the previous month and a 6.1 percent rise year-over-year, according to Yardi Matrix. Miami led in rent growth, posting an impressive 11.0 percent annual increase, marking a rare deviation from Southern California markets typically leading in this metric.
The Inland Empire followed with a 10.3 percent year-over-year increase, while New Jersey saw rents rise by 10.2 percent. Southeastern markets also performed strongly, with Atlanta recording a 9.0 percent increase and Nashville up by 8.7 percent over the past year.
New leases signed within the last 12 months averaged $10.30 per square foot, surpassing the national average by $2.08. Miami recorded the largest gap, with tenants paying $5.25 more per square foot for new leases compared to in-place rents.
The national industrial vacancy rate rose to 7.2 percent in October, a 20-basis-point uptick from the previous month. This marks a steady increase from the sub-4 percent vacancy rates seen in recent years. The highest vacancy rates were reported in Denver (9.6 percent), Indianapolis (9.1 percent), Baltimore (8.7 percent), and both Dallas and Chicago at 8.3 percent.
Industrial construction slows, sales hit $49B
By the end of October, 358.8 million square feet of industrial space was under construction nationwide, accounting for 1.8 percent of the total inventory. Industrial construction activity slowed in the third quarter, with only 69.3 million square feet delivered, down significantly from 119.3 million in the first quarter and 101.5 million in the second, according to Yardi Matrix.
Year-to-date industrial completions reached 310.2 million square feet, reflecting the impact of a sharp decline in new starts. After reaching 1.1 billion square feet during 2021-2022, new starts dropped to 352.1 million in 2023, with just 184.4 million initiated so far in 2024.
The most active pipelines as a percentage of inventory were in Phoenix (6.7 percent, 28.1 million square feet underway), Kansas City, Mo. (4.0 percent, 11.7 million square feet), Memphis, Tenn. (3.5 percent, 10.5 million square feet), Philadelphia (2.8 percent, 12.7 million square feet) and Columbus, Ohio (2.6 percent, 8.1 million square feet).
Year-to-date industrial sales through October totaled $49.2 billion. Industrial investment activity was concentrated in Dallas ($3.8 billion year-to-date in October), the Bay Area ($3 billion), Chicago ($2.6 billion), Houston ($2.5 billion), Los Angeles ($2.4 billion), Phoenix ($2.2 billion) and New Jersey ($2 billion).
Read the full Yardi Matrix Industrial Market Outlook: November 2024.
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