Nationwide industrial markets hit record high rents, low vacancy rates – Business Observer
As the pandemic drags on into its second year, e-commerce companies have helped fuel record vacancy rates and high asking rents at industrial properties across the country, according to JLLsecond quarter industry report.
The brokerage found second-quarter industrial rents to be among the highest on record, hitting $ 6.62 per square foot, and rents were up 5.1% year-on-year. The report predicts that rents will continue to increase between 4 and 7% in 2021 and 2022.
Pre-released space also hit an all-time high of 61% in the second quarter of 2021, thanks to large-box users looking for warehouse space of 500,000 square feet or more. Net absorption of industrial space in the second quarter was the highest on record, at 107 million square feet.
JLL found that construction of industrial space was unable to meet demand and rental this year as e-commerce tenants continue to expand and there is a limited amount of industrial land nearby. big cities.
In Los Angeles, the first and second quarters of 2021 were two of the busiest in recent history. The second quarter alone saw 9.8 million square feet of leased space, the majority of which was occupied by logistics and port companies. Los Angeles remains a huge international shipping hub, with a port that received one million 20-foot sea containers in May. .
Warehouses in Los Angeles have hit record vacancy rates, with just 1.9% of the space vacant in the last quarter, and even less in the three submarkets closest to the port. Asking rents are $ 1 per square foot and are expected to increase, according to the report.
The developers recently inaugurated several new industrial projects in South Bay and the San Gabriel Valley, which will help ease Los Angeles’ tight industrial market and its rental growth. The region has approximately 3.4 million square feet of warehouse space under construction.
The New Jersey industrial market also continues to explode, with 12.3 million square feet leased in the second quarter. E-commerce users accounted for a significant portion, approximately 3.2 million square feet, of this rental volume. Third-party logistics companies also inked about 2.2 million square feet in Garden State in the last quarter. Tenants are currently seeking approximately 26 million square feet of industrial space statewide. The vacancy rate hit an all-time high of 2.2% this quarter, as direct asking rents for warehouses continue to rise, averaging $ 10.47 per square foot.
The industrial market in New York City also remains incredibly tight. Approximately 20 leases covering 700,000 square feet were signed in the second quarter of 2021. The two largest contracts included a large e-commerce tenant that signed 226,729 square feet in Flushing, Queens, and 134,000 square feet in the South. Bronx.
On the investment sales side, CenterPoint Properties purchased a 144,000 square foot warehouse for $ 117 million in the South Bronx, and Madison Capital fall $ 45 million on a pair of Red Hook, Brooklyn, Industrial.
The vacancy rate hovers around 1.7 percent, no new industrial space has been delivered in the five boroughs this year, according to JLL. Approximately 2.7 million square feet of industrial space is under construction and is expected to be completed by the second quarter of 2022, with an additional 5 million square feet expected to begin construction over the next two years.
Rebecca Baird-Remba can be contacted at [email protected].