Q1 Industrial Prices Up One-Third, Sales Down About As Much
On average, US industrial assets traded for $110.04 per square foot last month.
Industrial space prices were up about a third in the first quarter while sales declined by about as much, according to a report by CommercialEdge.
The sale price per square foot for industrial space in March 2021 for the nation was 29.1% higher year-over-year. On average, US industrial assets traded for $110.04 per square foot last month.
Transactions closed during the first three months totaled $8.1 billion across the US industrial markets compared to nearly $11 billion in Q1 in 2020.
CommercialEdge found investor interest in Southern California markets has remained intense, as sales closed in Los Angeles and the Inland Empire accounted for more than 15% of the country’s total sales volume in the first quarter.
The firm investor predicted appetite for these assets should remain strong for the foreseeable future following their achievement of recording the largest 12-month rental rate increases nationwide.
Across the nation, the industrial vacancy rate throughout March ranged from 2.1% in the Inland Empire to 11.6% in Boston.
E-commerce fueled by the pandemic has led to record trade volume for the Port of Los Angeles each month.
“In turn, this has directly fueled even further tightening of space availability across the already hot Southern California industrial markets,” the study said.
As another indication of the strength of Southern California, the Orange County market took the top spot in terms of actual prices, with industrial real estate here commanding $11.11 per square foot last month.
As of March 2021, there was 367.8 million square feet of new industrial space under construction across the top markets CommercialEdge analyzed for the report.
The company noted of this, 60.5 million square feet of new supply has already been delivered since the start of the year and an estimated 200 million square feet is scheduled for completion before the end of the year.
In terms of new construction, the Dallas-Fort Worth metroplex is first for industrial development, with 28,380,671 square feet currently underway, which amounts to 3.9% of the total stock.
Chicago is second in line, with current developments adding up to nearly 20 million square feet of new industrial supply.
Houston industrial real estate is third, with 17,275,539 square feet of construction currently being built.
Nationally, the vacancy rate remained just above 6% as new stock meets increasing demand.