Industrial Market, Q1 2018

Industrial Market: Prices per Square Foot by Region

The below chart shows prices per square foot for the industrial sector, with the data smoothed to iron out the quarterly swings. The Industrial sector has captured significant investor interest over the last year or so given the expansion of e-commerce and warehouse/distribution space. Despite this interest, we show how the average price per square foot has not changed too dramatically over the last few quarters below. In the first quarter of 2018, the average price increased by 3.5% but there is no change from the first quarter of 2017. In fact, most of the growth in the average price was seen in 2013 to 2015 – there has been very little movement since then. The only regions that show a noticeable increase in prices are the South Atlantic and the Midwest. In the Northeast region, the average price per square foot has increased 22% over the last year, but the average is below the peak seen in 2014. This does not necessarily mean that industrial values have declined, but that the data may have some selection bias.

 

 

Industrial Market: Sales Volume by Region

When we look at Industrial sales volume by region, we see that the West dominates the numbers and has done so at an increasing rate. With $3.8 billion in sales volume in the first quarter of 2018, the West captured more than half the overall sales volume in the U.S., yet this region accounts for only 28% of the total for-lease industrial inventory.

INDUSTRIAL SALES VOLUME BY REGION - Graph
The chart also shows very flat trend lines for the Midwest, Southwest and Northeast regions. Volume in the South Atlantic had steadily risen from 2013 through most of 2017, but it has fallen in the last two quarters. At $7.5 billion, overall US industrial sales volume was unchanged in the quarter but climbed 5% over the last year.