Industrial rents have increased 4.8 percent over the last year, averaging $6.38 per square foot in December. The pandemic has drastically increased demand for industrial space, with tenants searching for new space paying a premium. The average rental rate for new leases signed over the past year was $7.26 per square foot, with an average vacancy rate of 4.8 percent.
Each of the top 20 markets covered by CommercialEdge has grown to some degree in average rent. Rent growth across the board has performed better than all other commercial real estate sectors, with a substantial number of both multifamily and office markets experiencing falling rents and increasing vacancies.
The increased demand for industrial space resulted in 228.4 million square feet coming online in 2020, though most of the projects were well underway before the start of the pandemic. E-commerce was a big contributor, having grown to one-fifth of all retail sales. However, industrial inventories overall dipped nearly 6 percent over the past 12 months.
The sector finished off 2020 with a total sales volume equal to three-quarters of 2019’s, a small drop compared to other property types. The average price per square foot of an industrial deal rose 7.1 percent in 2020 to $92.89.
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