February 21, 2020
For net absorption, California’s Inland Empire represents an unassailable peak among U.S. industrial markets, in terms of both fourth-quarter and full-year numbers. With Q4 absorption of nearly 7.6 million square feet and 12-month absorption approaching 24 million square feet, the Inland Empire leads second-ranked Dallas/Fort Worth by a considerable margin.
However, absorption is the only metric, as measured by Transwestern in its Q4 2019 national report, for which this market can claim superlatives. With all of that absorption going on in the Inland Empire, its neighbor to the west—Los Angeles—boasts the lowest vacancies among the major industrial markets.
With demand driven in part by shipping in and out of the Ports of Los Angeles and Long Beach, L.A. industrial ended 2019 with overall vacancy of 1.4% and direct vacancy of a vanishingly low 1.2%. Orange County was the only other market to come in below the 2% threshold, and then only for direct vacancies.
What about inventory? Here, L.A. takes a back seat to Chicago. The Midwest’s largest city and its metro area represent the only U.S. industrial market with 10-figure inventory.
However, Chicago saw net absorption of just 13 million square feet last year on that inventory of 1.3 billion square feet, putting it well behind Dallas/Fort Worth and not too far ahead of fourth-place Atlanta.
That massive inventory in Chicago’s industrial market is also growing more slowly than its counterpart in Dallas/Fort Worth. Developers in North Texas have about 30.3 million square feet of product under construction, compared to 18.5 million square feet in Chicago, Transwestern says.
None of the markets discussed here thus far can claim the highest asking rents among the major markets. That distinction goes to the District of Columbia at $14.35 per square foot. The D.C. region also has the smallest inventory of these markets, at about 9.5 million square feet, as well as the smallest pipeline of new construction.
The market with the fastest year-over-year rent growth for U.S. industrial? Vegas, baby. Southwestern Nevada saw asking rents increase by an average of 19.2% over the course of 2019. However, unlike D.C. and 10 other markets, it still comes in below $10 per square foot.
Pictured: Westport Logistics Center, Dallas.
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