SoCal Leads Nation With $5.7B in Industrial Sales in 2021
The nation closed $36.6 billion in industrial real estate sales, setting a new record for the first eight months of the year.
American ports are busier than ever, shattering records set in 2020 while driving the hottest part of commercial real estate — most notably in Southern California.
Growing volumes of cargo, COVID-19 safety measures and a labor shortage have all led to a record number of cargo ships lining up to wait off the U.S. coast amid a supply chain crisis. A new report from CommercialEdge shows industrial properties in port markets are in high demand with the highest rent growth in the nation.
By the start of last month, the nation closed $36.6 billion in industrial real estate sales, setting a new record for the first eight months of the year. And $6.6 billion was signed in August alone, suggesting that transactional activity will continue at a strong pace.
Los Angeles, the Inland Empire and Orange County combined for more than 15 percent of all sales volume so far this year. L.A. led the nation in sales at $2.8 billion after eight months. The Inland Empire took in $2.3 billion during the same time period.
For example, CenterPoint Properties bought a former K-Mart distribution center in the Inland Empire for $215 million in March 2020 and sold it to Costco for $345 million this May. And, in a deal that closed at the end of August, CenterPoint acquired a property in L.A. County in a sale-leaseback with Miami’s Moishe Mana for a whopping $363.88 per square foot.
Similar to July, August’s highest rents and rent increases were again recorded in port markets, especially West Coast markets. Nationally, average rent for industrial space hit $6.35 per square foot, up 3.8 percent compared to the same period last year. The Inland Empire led the country with a 6.6 percent increase, followed by L.A. with 6.5 percent, New Jersey at 6.2 percent and Seattle’s 5.7 percent.
Industrial vacancy rates are also generally lowest in port markets, with the tightest in the nation in the Inland Empire at 1.2 percent. Vacancies are also tight in Los Angeles at 3.2 percent; Orange County at 3.5 percent; and New Jersey at 3.6 percent.
Summer closed with 500 million square feet of industrial space under construction, and another 509.3 million square feet in the planning stages. The Inland Empire is looking to relieve some of its extremely low vacancy pressure with an additional 22 million square feet of space, the third-largest volume nationally, behind Dallas-Fort Worth and Phoenix.
Gregory Cornfield can be reached at firstname.lastname@example.org.