A record-shattering quarter for industrial real estate

Asking rents at new peak as net absorption sets single-year record

National /
Nov.November 16, 2021 05:30 PM
Industrial real estate saw highest net absorption since 2008 and the highest quarterly asking rents on record. (iStock/Illustration by Kevin Rebong for The Real Deal)

Industrial real estate saw highest net absorption since 2008 and the highest quarterly asking rents on record. (iStock/Illustration by Kevin Rebong for The Real Deal)

Industrial real estate made history in the third quarter as e-commerce and other tenants grappled for limited U.S. warehouse space.

The segment logged 159 million square feet of net absorption — the amount of space newly occupied minus the amount vacated. It was the highest quarterly total since 2008, Transwestern said in a report.

The third-quarter gain pushed the net absorption total over the past year to more than 540 million square feet — the first time ever the metric has surpassed 500 million square feet over a 12-month period.

Vacancy fell to 4.7 percent, and in California’s Inland Empire and New Jersey’s Orange County it was just 3 percent. The tight market stems in part from Amazon and other internet retailers’ leasing warehouse space to ship more stuff to more customers faster than ever.

The low vacancy signals the need for “creative property strategies,” said Matthew Dolly, Transwestern’s research director. “The fourth quarter will further test the resiliency of the industrial sector, as ongoing supply chain issues will be exasperated during what is anticipated to be a strong holiday spending season, and could slow new and in-progress industrial projects.”

Industrial asking rents posted a new quarterly high of $7.11 per square foot, up from $6.98 in the second quarter. More than a third of the 44 markets the firm tracks saw double-digit percentage gains year-over-year.

Higher rents have made redevelopment prospects more attractive, even in rapidly growing markets such as Savannah, Austin and Pennsylvania’s Lehigh Valley, the firm said.

Some 637 million square feet of industrial warehouses are under construction across the country — almost double the volume of five years ago.

Investors continue to jockey for dominance in commercial real estate’s hottest segment. This month, a group of investors led by Singaporean sovereign wealth fund GIC purchased 328 U.S. industrial properties for $6.8 billion, one of the largest industrial deals ever.





    Related Articles

    arrow_forward_ios
    Seth Weissman, John Catsimatidis, Mayor Eric Adams
    They said what now? Real estate quotes of the week
    They said what now? Real estate quotes of the week
    From left: Robert Reffkin and Rupert Murdoch (Getty, Compass)
    ChatGPT didn’t write this week’s real estate news roundup, we promise
    ChatGPT didn’t write this week’s real estate news roundup, we promise
    Redeemer’s Timothy Keller and 150 East 91st Street (Getty, Google Maps, Redeemer)
    Redeemer Presbyterian’s UES development plans vex co-op residents
    Redeemer Presbyterian’s UES development plans vex co-op residents
    Seth Weissman, Financing
    Urban Standard wants to rescue property owners from high interest rates
    Urban Standard wants to rescue property owners from high interest rates
    From left: Michael Dell with 25 Water Street, Alex Sapir with 261 Madison Avenue and Marc Holiday with One Madison Avenue (Getty, Edge Funds, Sapir Organization, SL Green)
    Office properties (yes, office!) got Manhattan’s biggest December loans
    Office properties (yes, office!) got Manhattan’s biggest December loans
    Salim Assa with 15 West 55th Street
    Troubled Midtown rental saga headed for a foreclosure finale
    Troubled Midtown rental saga headed for a foreclosure finale
    Rendering of 640 Columbia Street in Red Hook, 9-11 Metrotech Center and TerraCRG's Ofer Cohen
    Brooklyn boasted $9B in investment sales last year
    Brooklyn boasted $9B in investment sales last year
    Atlas Hospitality Brokerage president Alan Reay (Atlas Hospitality Brokerage)
    Listen: Inside the looming distress across the hotel market
    Listen: Inside the looming distress across the hotel market
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...