Industrial Sale Prices Hold Firm Amid Normalizing Demand and Shifting Capital Markets

Key Takeaways: 

• National industrial in-place rents averaged $7.68 per square foot in February, up 7.5% year-over-year
• The national vacancy rate stood at 5.0%, up 20 basis points month-over-month
• Nationwide, nearly 420 million square feet of industrial space were under construction
• Industrial transactions totaled $5.7 billion through February, at an average sale price of $132 per square foot
• The Inland Empire saw the highest rent growth nationwide, with average rents up 12.7% year-over-year in February
• Phoenix had the most significant development pipeline, encompassing 42.7 million square feet
• Orange County had the highest in-place rents for industrial space, averaging $15.29 per square foot
• Los Angeles recorded the largest sales volume, reaching $435 million in the first two months of the year

Artificial intelligence has witnessed a significant surge in growth during the past year. The technology’s resource-intensive nature requires vast data and processing power, naturally leading to a rise in demand for data centers, our latest U.S. industrial market report reveals.

In the 120 markets covered by CommercialEdge, there are currently 27.4 million square feet of data center space under construction, and an additional 33.5 million square feet are in the planning stages.

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RSK: Lease rates are up as is a slight increase in vacancy. This is probably due to companies leaving older types of industrial properties for newer more functional ones.