Industrial Rent Growth Rises Nationwide As Miami Takes The Lead
December 2, 2024
National in-place rents for industrial space increased 6.8% year over year in October to $8.22 per square foot, which was a six-cent increase from September, according to CommercialEdge’s US industrial market report.
October was one of the few months in which a Southern California market did not lead in rent growth. Industrial rents grew fastest in Miami – up 11% year-over-year – with more than 15 million square feet of new, high-quality industrial space coming to market since 2022. Other Southern markets also saw strong growth, with in-place rents increasing 9% in Atlanta and 8.7% in Nashville over the past year.
Western markets continued to post the highest asking rents in the nation, with most seeing double-digit rates. This includes Orange County ($15.95 per square foot), Los Angeles ($15.05), the Bay Area ($13.49), Seattle ($11.51) and the Inland Empire ($10.69).
National in-place rents for industrial space increased 6.8% year over year in October to $8.22 per square foot, which was a six-cent increase from September, according to CommercialEdge’s US industrial market report.
October was one of the few months in which a Southern California market did not lead in rent growth. Industrial rents grew fastest in Miami – up 11% year-over-year – with more than 15 million square feet of new, high-quality industrial space coming to market since 2022. Other Southern markets also saw strong growth, with in-place rents increasing 9% in Atlanta and 8.7% in Nashville over the past year.
Western markets continued to post the highest asking rents in the nation, with most seeing double-digit rates. This includes Orange County ($15.95 per square foot), Los Angeles ($15.05), the Bay Area ($13.49), Seattle ($11.51) and the Inland Empire ($10.69).
Across the country, the national industrial vacancy rate has been trending up through the year and reached 7.2% in October, up 20 basis points month over month. CommercialEdge attributed this to a surge in new supply coupled with softening demand.
About 359 million square feet of industrial space was under construction as of October, representing 1.8% of stock. Year-to-date industrial completions totaled 310.2 million square feet, with only 69.3 million square feet of that delivered in the third quarter. The slowdown reflects a decline in construction starts that commenced last year, said CommercialEdge.
Industrial sales totaled $49.2 billion year-to-date through the end of October, with properties trading at an average of $129 per square foot. Sales volume is down by $1.1 billion compared to the same period last year, however interest rate cuts are expected to bolster sales activity that could outpace 2023 by year-end, the firm said.
Dallas-Fort Worth has seen the most significant increase in transaction volume, with $1.1 billion more in industrial sales through the first three quarters of 2024 compared to the same period last year. Other markets to record significant upticks in sales volume through the third quarter include Chicago ($678.2 million), Denver ($622.9 million), the Bay Area ($601.5 million) and Miami ($584.2 million).
Sales volume declined most sharply in Southern California. Los Angeles recorded a $2.2 billion drop in sales volume compared to the first three quarters of 2023, while the Inland Empire saw a $1.3 billion decline over the same period.
Access to power remains one of the biggest challenges for the industrial sector, driven by the energy-intensive nature of automation, artificial intelligence, advanced manufacturing and data centers, said CommercialEdge. To mitigate these issues, tenants will likely show increasing interest in solar and other sustainable energy sources in the coming years, particularly in high-temperature locations prone to brownouts. This is especially true for advanced manufacturing and other facilities requiring climate control. In addition, a shortage in warehouse and storage workers could further accelerate the adoption of automation in warehouses as firms look to mitigate labor shortfalls, the report said.
Source: GlobeSt