Last year ended the same way it began for industrial real estate: Demand for this commercial sector continued to soar, pushing up rents as it did so.
That’s the takeaway from CommercialEdge’s December 2022 national industrial report.
CommercialEdge reported that the national average rent for in-place industrial leases reached $7 a square foot as of the end of November of last year. The amount of new construction rose, too, with CommercialEdge reporting that there were 742.3 million square feet of industrial space under construction in the country as of the end of November.
What’s especially interesting, though, is that even with all this new supply coming online, the national industrial vacancy rate continued to fall throughout 2022, sinking to 3.8% as of the end of November.
National in-place industrial rents rose 6.5% on a year-over-year basis, according to CommercialEdge.
Two Midwest cities in particular — Nashville and Detroit — saw big jumps in industrial rents as of the end of November.
CommercialEdge reported that the national industrial rent in Nashville stood at $5.52 a square foot as of the end of that month. That’s an increase of 6.4% when compared to the same month one year earlier.
And in Detroit, the average industrial rent stood at $6.13 a square foot as of the end of November, an increase of 6.2$ when compared to 12 months earlier.
The jump in industrial rents is showing no signs of slowing as the new year begins. CommercialEdge reported that the average rate of a lease signed in the last 12 months was $9.07 a square foot, $2.07 more than the average for all in-place leases.
It’s not surprising, then, that developers are rushing to add more industrial space to the country’s busiest markets. According to CommercialEdge, Dallas led the country with 62.57 million square feet of new industrial space under construction as of November. Chicago was fourth, with 26.24 million square feet of industrial space under construction as of the same month.
In Indianapolis, 22.79 million square feet of industrial space was under construction as of November, while Columbus had 15.88 million square feet under construction. Kansas City had 11.04 million square feet of industrial space under construction, while Cincinnati had 9.52 million. In the Twin Cities, 6.01 million square feet of new industrial space was under construction as of November.
