The Top US Industrial Markets for H1 2021

Los Angeles and the Inland Empire of Southern California are the top US industrial markets for the first half of the year, according to new data from Real Capital Analytics. 

Los Angeles netted $3.2 billion in activity for the first half of 2021, 13% higher than its previous record level at a midyear.  The Inland Empire also rocketed up three slots to the #2 slot, registering $2.527 billion in sales and posting six transactions of $100 million or higher.  Of note was Costco’s $345 million purchase of a distribution facility in the IE that was the highest price ever paid for an industrial asset in the region.

The two SoCal markets were followed by Chicago ($2.3 billion); Houston ($1.93 billion); Atlanta ($1.89 billion); Dallas ($1.8 billion); Boston ($1.4 billion); Phoenix ($1.37 billion); North New Jersey ($1.34 billion); and Seattle ($1.29 billion).

And though not in the top 10 markets, Reno clocked in at #25, moving up 24 slots from its year-end 2020 rank.  That’s the biggest jump in any market, and was pushed by the sale of a single portfolio to Starwood Real Estate Income Trust by Blackstone’s Link Logistics.

Industrial has been on a tear throughout the pandemic as surging e-commerce sales pushed brands to rethink fulfillment strategies, pushing demand for space higher. The industrial sector had a record Q2 for sales across all deal structures, according to RCA data, with prices rising 9.8% over a year ago. 

The window for buyers may be closing, though, according to John Chang, senior vice president and director of Research Services at Marcus & Millichap.

“Interest rates are still exceptionally low, and lending liquidity is high,” Chang says. “So investors can lock in fantastic financing right now. But competition for assets is strong, and prices are generally pushing up. Between that and the prospect of rising interest rates the strong buying window will not be open for long.”