Despite the challenges of higher interest rates, industrial properties remain one of the most in-demand commercial real estate asset classes across the nation, according to CommercialEdge’s November industrial report.
How strong is the demand for this asset type? CommercialEdge says that investors have closed $44.4 billion in industrial deals year-to-date through October. That’s a far stronger showing than the $27.9 billion recorded in office sales during the same period.
In little surprise, Chicago has notched the largest sales volume in the Midwest so far this year, closing $1.63 billion in industrial deals as of the end of October.
That doesn’t mean that even this sector isn’t facing challenges today. As CommercialEdge reports, vacancy rates in the industrial sector did rise, jumping 70 basis points from 3.9% in January of this year to 4.6% in October.
National industrial in-place rents averaged $7.55 a square foot in October, up 7.6% on a year-over-year basis. CommercialEdge says that nearly 513 million square feet of industrial space was under construction as of the end of October.
The Dallas-Fort Worth market has led the south in industrial development so far this year with a 42.4-million-square-foot pipeline and sales with a $2.29 billion deal volume.
Columbus experienced the largest increase in rents in the Midwest, rising 6% from year-ago figures, well below the national rate of 7.6%. In contrast, Cincinnati saw the lowest increase in rent rates in the region and nationwide, up just 3.7% year-over-year to $4.73 per square foot.
Overall, all Midwestern markets recorded asking rents below the national average, with Detroit ($6.68 per square foot) and Twin Cities ($6.61 per square foot) prices coming the closest to the national figure. Chicago followed with in-place rents at $5.87 per square foot.
