Xem thêm

2023 Industrial Sales Total $52 Billion, Roughly Half of 2022 Volume

After an eventful year in the industrial real estate sector, 2023 witnessed a significant decline in sales volume, reaching approximately $52 billion, which is roughly half of the volume seen in 2022. This decline can...

After an eventful year in the industrial real estate sector, 2023 witnessed a significant decline in sales volume, reaching approximately $52 billion, which is roughly half of the volume seen in 2022. This decline can be attributed to multiple factors, including the increase in interest rates implemented by The Federal Reserve, which raised the cost of capital for investors. However, despite the decline in sales volume, average sale prices saw a slight increase, growing by 4.7% year-over-year.

Trends & Industry News: Industrial Outlook Solid Heading Into 2024

Looking ahead to 2024, the industrial real estate sector is expected to stabilize and normalize after experiencing significant growth following the pandemic. This year will likely be a period of stabilization and consolidation, as the impact of record levels of new supply works its way through the market. Rental rate growth is expected to cool, and vacancy rates are projected to climb.

One key trend observed in the industrial sector is the reshoring and nearshoring of manufacturing. While the full impact of this trend may not be seen in 2024, the construction of new manufacturing facilities has nearly tripled in the last two years. This growth is particularly evident in industries such as computer chip and electric car manufacturing, which will fuel demand for supplementary firms along supplier and logistic networks.

Moreover, the e-commerce sector has seen significant growth during the pandemic, leading to permanent changes in how goods are distributed from retailers to consumers. The gains made by e-commerce during this period have become entrenched, further boosting the long-term demand for industrial assets.

Rents and Occupancy: Port Markets Continue to Dominate Rent Growth

In December, national in-place rents for industrial space averaged $7.70 per square foot, representing a 7.4% increase compared to the previous year. Southern California, particularly the Inland Empire, Los Angeles, and Orange County, experienced the highest surge in in-place rents throughout 2023, with double-digit growth in rent rates.

On the other hand, rent growth in the Midwest was slower compared to port markets. Markets such as Detroit, Chicago, and Kansas City saw lower gains in in-place rents, primarily due to the availability of abundant land on the outskirts of these metro areas, allowing for a quick supply response.

Coastal markets, including the Inland Empire, Los Angeles, the Bay Area, Miami, and Seattle, saw the largest spreads between existing rents and newly signed leases within the last 12 months, indicating strong demand and potential for continued growth in these regions.

The national industrial vacancy rate remained unchanged at 4.6% in December. However, the vacancy rate increased by 70 basis points over the course of the year due to the delivery of historic levels of new supply and a cooling in demand.

Supply: New Industrial Projects Experience Slower Growth

As of December, there were nearly 463 million square feet of industrial space under construction nationwide, representing 2.4% of the existing stock. This marks a decrease compared to the peak of 742.3 million square feet in December 2022.

The deceleration in new construction can be attributed to several factors, including the normalization of demand, increased borrowing costs, and stricter lending standards for construction loans. Despite the slowdown in new development, long-term demand drivers for industrial assets remain positive, indicating a stable outlook for the sector.

Western Markets: Los Angeles Records Largest Industrial Sales Volume in 2023

Western markets continued to outperform other regions in terms of industrial sales volume and prices. The top four sale prices in the nation were all logged in the West, with the Bay Area leading the way at an average of $334 per square foot, followed by Los Angeles, Orange County, and the Inland Empire.

Los Angeles and the Inland Empire also had the largest sales volumes among the leading U.S. industrial markets, with investors closing deals worth $3.96 billion and $3.89 billion, respectively.

The West, particularly Southern California, saw robust rent growth, with the Inland Empire experiencing a notable surge of 14.9% year-over-year in December. Other markets such as Seattle, Phoenix, and Portland also posted substantial gains in rent rates.

Midwestern Markets: Kansas City Posts Lowest U.S. Industrial Vacancy Rate

Kansas City emerged as a key market for industrial and logistics operations in the U.S. due to its strategic location and robust infrastructure. At the end of December, Kansas City had the lowest industrial vacancy rate in the country at 2.7%. However, rent growth in Kansas City remained slower compared to port markets, with in-place rents increasing by only 3.9% year-over-year.

Other Midwestern markets, such as Columbus and the Twin Cities, also recorded low vacancy rates and modest rent growth. Detroit and the Twin Cities came close to the national average rent rate, while Columbus saw the most notable rent growth in the region.

Southern Markets: Texas Leads in New Construction Starts

Texas has become a leading region for industrial development, driven by population growth, a dynamic workforce, and increased trade with Mexico. In 2023, Texas had the highest concentration of new construction starts, with Dallas-Fort Worth, Houston, and Austin leading the way.

Dallas-Fort Worth had the highest number of construction starts, but the pace of new supply in the pipeline has significantly decelerated. The market experienced a 7.1% year-over-year growth in in-place rents, reaching $5.77 per square foot in December.

Southern markets such as Nashville, Charlotte, and Miami saw low vacancy rates and robust rent growth. Miami remained the priciest industrial market in the South, with in-place rents averaging $10.69 per square foot.

Northeastern Markets: New Jersey Leads in Sales Volume

New Jersey and Boston continued to be the most expensive industrial markets in the Northeast, with double-digit asking rents. New Jersey recorded the largest sales volume in the region, totaling $2.73 billion, and also had the highest average sale price at $218 per square foot.

Philadelphia led the region in terms of new supply, while Boston had the smallest construction pipeline. Bridgeport recorded a notable lease rate and modest rent growth.

Economic Indicators: Producer Prices Stabilize

The Producer Price Index (PPI) fell 0.1% in December, driven by a 0.4% decrease in the goods segment. However, services remained unchanged. On an annual basis, producer prices saw a 1% increase, with services registering a 1.8% rise and goods experiencing a 0.8% decrease.

The stabilization of producer prices brings positive news for the industrial sector, as occupiers may now consider expansions and new leases that were previously unfeasible when faced with annual price increases.

In conclusion, despite the decline in sales volume, the industrial real estate sector continues to show resilience and solid potential for growth. The market is expected to stabilize in 2024, with the long-term demand drivers remaining positive.