If one were inclined to call real estate “sexy”, they probably wouldn’t be talking about industrial real estate. Storage spaces and manufacturing buildings are rarely highly visible or highly designed. But with the recent boom in online shopping and local manufacturing, investing in industrial real estate has suddenly become a very attractive prospect.
Are you considering showing some love to the industrial sector? Here are three numbers that tell you everything you need to know about industrial real estate right now.
How Big is the U.S. Industrial Real Estate Market?
Pressure to close supply chain gaps resulted in record-setting rental growth for industrial spaces in 2021. Pre-leasing rates hit record highs, and competition brought vacancies to a record low. Overall, the sector saw more than 141.8 million square feet absorbed into the market in Q4 2021. Year-end net absorption* rates exceeded prior expectations, totaling 495.7 million square feet. That includes 89.7 million square feet of newly constructed space. But with vacancy rates of 3.8% (the first time ever dipping below 4%), demand is only expected to increase. 467 million square feet of industrial real estate are currently under construction.
*Net Absorption: the sum of square feet that became physically occupied minus the sum of square feet that became physically vacant during a specific period.
What is the Future of Industrial Real Estate?
According to Deloitte, “From 2014 to 2018, the industrial real estate market experienced a net absorption of nearly 1.4 billion square feet.” But how long will this “golden age” of industrial real estate last? In the near term, double-digit e-commerce growth will continue to drive strong growth in the sector. Moving forward, macroeconomic factors, tenant needs, last-mile delivery, and rapid evolution of technology will likely reshape both real estate demand and warehouse space design. Owners and investors would be wise to focus on high-growth areas and develop smarter facilities to align with evolving tenant needs. This includes making warehouses more efficient to manage rising costs.
What’s the Going Rate for Industrial Real Estate in the Asheville MSA?
If this outlook has you excited to invest in local industrial properties, the next step is to understand the local market. According to the NAI Beverly-Hanks Year-End 2021 Market Report, industrial transactions more than doubled in 2021, totaling $34.9 million (up from $14.8 million in 2020). And while the local vacancy rate is a little better than average for the nation, it’s still very low. In Q4 2021, it sat at 4.1% (down from 5.4% the year prior).
Conditions for industrial real estate vary among different industries and geographical areas. However, the Asheville MSA has strong rates of employment in retail (14%), manufacturing (12%), and wholesale trade (3%). That means there is always a steady supply and demand, and financial conditions fare well, for industrial assets.
Ready to Invest in Industrial Real Estate?
NAI Beverly-Hanks continually strives to be the best in the business and provide you with the expertise you need. Contact us today to speak with an NAI Beverly-Hanks agent about investing in the perfect industrial spaces for your commercial investment goals.