Industrial Pricing Cools In Q3 As Headwinds Loom

Industrial pricing cooled somewhat in the third quarter, the average price per square foot declined from $136 to $127, according to CommercialEdge.

“Rising interest rates, inflation and other economic headwinds have dampened the transactions market,” the firm notes in a new analysis. “Despite the decrease in the quarter, prices have increased 15.5% over the past year and 53.9% over the past two years.”

Half of the top 30 markets surveyed by the firm saw prices slump in Q3, with the average sale price falling 40% in Baltimore, 36% in Charlotte, and 30% in Tampa and the Central Valley.  But “with volume down in the quarter and a lag in collecting some sales, it is too early to say= whether this is the start of a trend or just a blip,” the report says.

And on the other side of the coin, Columbus saw sales prices tick up by 57% quarter-over-quarter, while Atlanta was up 41% and the Bay Area increased by 40%. So far this year, $65.4 billion in industrial deals have transacted across the US.

Recent research by Cushman & Wakefield has also suggested the industrial leasing market is showing signs of softening, with vacancy ticking up 20 basis points in the third quarter and net absorption slumping 132 million square feet from Q2. Cushman analysts predict vacancy will creep even higher by the end of the year, but will remain “near historically low levels” before rising to the mid-4% range by the end of 2023.