Read the latest Yardi Matrix Industrial Market Report.
Despite a slowdown in total sales volume, the average sale price of an industrial asset continues to grow, reaching $135 per square foot in July, according to the latest Yardi Matrix national industrial market outlook.
Report Highlights
- National in-place rents for industrial space averaged at $8.15 per square foot at the end of July, a 7.3 percent increase from August 2023 and 11 cents more than the month prior.
- Nationwide industrial vacancy recorded a 30-basis-point uptick from the previous month and averaged 5.6 percent at the end of July.
- The under-construction pipeline featured 379 million square feet of industrial space as of July.
- Total industrial transaction volume amounted to $30.7 billion year-to-date in July.
Spread between leases at $2.39
In July, the national average rent for industrial space reached $8.15 per square foot, reflecting a notable increase of 730 basis points year-over-year and an 11-cent rise from the previous month. The Inland Empire once again led in rent growth, with in-place rents climbing 12.4 percent over the past year, followed by Los Angeles at 11.0 percent, Miami at 9.7 percent, and New Jersey at 9.0 percent. Orange County saw an 8.7 percent uptick, while Phoenix recorded an 8.4 percent gain.
At the same time, the national industrial vacancy rate rose to 5.6 percent in July, a 30-basis-point increase from the previous month. This increase is primarily due to the historic surge in new supply over the past three years. According to Yardi Matrix, Charlotte had the lowest vacancy rate at 3.7 percent, followed closely by Columbus at 3.9 percent.
The average rate for new leases signed in the past year was $10.54 per square foot, $2.39 higher than the overall lease average. While vacancy rates have risen due to the influx of new supply, the newly delivered, high-quality spaces are commanding premium rents. In Miami, new lease rates were $5.76 per square foot above the market average, with substantial premiums also seen in Charlotte ($3.94), Dallas ($3.57), Los Angeles ($3.55), and Nashville ($3.51).
Industrial sales concentrated in Southern markets
By the end of July, there were 379 million square feet of industrial space under construction nationwide, representing 1.9 percent of the total stock, according to Yardi Matrix. After adding over 1.1 billion square feet in 2022 and 2023—an increase of 5.8 percent—the pace of new deliveries has begun to decelerate in 2024. The first seven months saw 229.3 million square feet delivered, signaling the start of a slowdown. Construction starts, which exceeded 500 million square feet in 2021 and 2022, have fallen to 127.2 million so far this year.
Phoenix led with the largest construction pipeline on a percentage-of-stock basis, with 9.2 percent (36.9 million square feet) underway, followed by Kansas City (4.0 percent, 11.8 million square feet), Memphis (3.4 percent, 10 million square feet), Denver (3.0 percent, 8.1 million square feet), Charlotte (2.8 percent, 8.1 million square feet), and Central Valley, Calif. (2.5 percent, 8.9 million square feet).
Meanwhile, industrial investment during the first quarter of 2024 reached $30.7 billion, with properties trading at an average of $135 per square foot. Sales activity was concentrated in the Bay Area ($2.5 billion), Dallas-Fort Worth ($2.4 billion), Los Angeles ($1.8 billion), Chicago ($1.5 billion), and Phoenix ($1.3 billion).
Read the full Yardi Matrix Industrial Market Outlook: August 2024.
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