Industrial Demand Continues to Rise in 3Q11
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Demand for industrial space eclipsed 20 million square feet for the third consecutive quarter, according to Cassidy Turley’s 3Q11 U.S. Industrial Report. Vacancy dropped 10 basis points quarter over quarter and is down 70 bps from its peak of 9.9 percent in 2Q10. Despite strong third-quarter indicators, the report says the sector’s momentum will slow if the European debt crisis worsens.
Year-to-date industrial sales volume is up 58 percent but trails growth in the surging hospitality sector (+160 percent) and multifamily (+83 percent).
Top Five Industrial Markets by Volume, Aug. 2010 - Aug. 2011
- Inland Empire, Calif.
- Dallas
- Chicago
- Los Angeles
- New Jersey
Average asking rents in the 67 markets the report tracks increased to $5.13 per square foot, which was a $0.04 increase over the previous quarter and marked the third consecutive quarter in which rents increased. The rent growth follows steady declines dating back to 2Q09. San Francisco had the highest asking rent at $9.72 psf. The only non-California market to break into the top five was suburban Virginia, with an asking rent of $6.99 psf.
Citing $3.5 billion worth of industrial listings through August, the report concludes that “sales will continue at a healthy clip through the reminder of the year.” However, what happens after year-end depends on how deeply the European debt crisis affects U.S. consumer confidence, which was at a recessionary level of 45.4 in September.
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