Justin Smith, SIOR’s Post

The #industrial real estate market in Southern California’s Inland Empire — the top in the nation, with more than 717 million square feet of space — has entered a new era after a year of declining sales, rising vacancy rates and unprecedented levels of construction marking a defining shift in dynamics. #CommercialRealEstate

Developers shifting their focus to building smaller industrial building? Good interview with Susan Bergdoll, at CRG. Interestingly, she noted – “CRG’s strategy has been to develop large buildings of 500,000 square feet and above. While that will continue to be a focus, we’ve also said that it’s important to build smaller properties, too, infill product in the 75,000-square-foot to 200,000-square-foot range. That has been our focus for the past couple of months. If you can build a product of that size in a plus location, there is always demand.” This pivot is not surprising as leasing demand for the large 500,000+ sf buildings has fallen the most dramatically. Demand remains strong for smaller infill industrial. It will be interesting to see how developers will be able to make the numbers work? Infill land is difficult to find and far more expensive, plus smaller buildings cost more (on price/sf basis). In most markets, the lease rates you would have to achieve are well above a “market” rate. A key element to our strategy of acquiring well located existing industrial properties is how cost prohibitive it is to build new competing supply. We can buy functional buildings at a significant discount to replacement cost. With healthy demand and limited supply, we see additional runway for rent growth in the infill Class B industrial space. https://lnkd.in/gZtBFNzV

I have been stearing my clients to add small industrial to their portfolio for some time. The demand is very high in good and bad economic times, Now the cost to build is so expensive developers have to buid huge buildings. What is demand for small warhouse in your market? From CRE Daily: Rexford Navigates Industrial Market Slump with Smaller Warehouses Rexford Industrial Realty (REXR) is thriving amid a national warehouse slump by focusing on smaller buildings. Going small: The Los Angeles-based REIT reported a 2.7% vacancy rate in June, outperforming the Southern California infill market's 3.9% and the national average of 7.1%. Rexford's strategy centers on smaller warehouses averaging 26,000 square feet, leading to higher occupancy rates. By the numbers: Despite a 4% rent increase, tenants are renewing leases, anticipating future market-wide rent hikes. The firm's executives highlight the high entry barriers in Southern California for similar warehouse sizes, contributing to their stable tenant base. Earnings report: In Q2, Rexford achieved a net income of $79.8M, a 55% increase from the previous year. Total revenues climbed to $237.6M, a 21% rise. As a result, JPMorgan adjusted the price target for Rexford Industrial Realty, increasing it to $52.00 from the previous figure of $47.00. Zoom out: Nationally, net absorption for industrial properties fell to 45.5 million square feet from 74.4 million square feet the previous year. Southern California's industrial market is experiencing increased vacancies due to reduced consumer spending, with projections indicating this trend will continue. ➥ THE TAKEAWAY Looking ahead: Rexford anticipates some near-term volatility but remains optimistic about long-term rent growth in Southern California. They're keeping an eye on 3PL tenant losses, tariff changes, and power supply issues. Meanwhile, Prologis (PLD) reported an 18% revenue drop last quarter due to rising vacancies and decreased demand post-pandemic, now shifting focus to data centers and AI for future growth.

As much as I love my Kansas City multifamily, it's always great to diversify. We have an industrial deal just north of Charlotte that we closed on earlier this year and are making great progress on that development/transition. While multifamily gets all the glamor, other sectors of commercial real estate are often just as profitable. Industrial is one that many people do not consider, but a quick read through this article illustrates it's a hidden gem. With the growth of e-commerce, industrial will only get bigger. Curious about how to invest in commercial real estate? Let's chat! https://lnkd.in/gSkUMP6w

Charleston-area industrial real estate market, once seemingly unstoppable, hits the brakes. The three-county Charleston region's industrial real estate market, once red hot, has cooled with average rents on the decline and supply outstripping demand.

In 2024, industrial property values have risen to an average of $142 per square foot, a 15.4% increase from last year and a 71.2% rise since 2019, as reported by CommercialEdge. Prices in major markets like Nashville, the Inland Empire, and Philadelphia more than doubled from 2019 to 2023, driven by lease rate increases and manufacturing shifts toward nearshoring. https://bit.ly/4cWJ472. 

Thompson Thrift is excited to share insights on the current state of the Phoenix industrial market and why we feel notable plans for near-term investment demonstrate a promising outlook for the future of the market. “While national industrial numbers continue to show a cool down after record growth coming out of the pandemic, Phoenix’s diversified economy, affordability relative to other larger cities in the Southwest and business-friendly regulation have allowed it to remain one of the strongest markets for population and job growth and one of the top-performing industrial markets in the nation,” said Ashlee Boyd, Managing Partner for Thompson Thrift Commercial. To read more about our team's insights on the positive net absorption and large scale deliveries in the Phoenix market, strong leasing activity and notable plans for expansion for our industrial developments, and the impact of low construction starts and healthy pre-leasing activity on rent growth, please visit our website https://bit.ly/3KO2XQW . . . #industrial #industrialmarket #commercial #phoenix #phoenixindustrial #phoenixmarket #commercialdevelopment #industrialdevelopment #thompsonthriftcommercial #ttcomm #phoenixindustrialmarket #thompsonthrift #weareTT

📈 CommercialEdge Reports Industrial Property Values on the Upswing 📊 Market Growth: Industrial property values have surged by 15.4% year-over-year, reaching $142 per square foot nationally as of May 2024. 🌟 Long-Term Trend: Prices have more than doubled since 2019 in key markets like Nashville, the Inland Empire, and Philadelphia. 🏢 Market Insights: Despite reduced transaction volumes, prices continue to rise in hotspots such as New Jersey, Dallas-Fort Worth, and the Bay Area. 🔍 Future Outlook: With new construction slowing and stable demand, the outlook remains strong, driven by manufacturing shifts. 🚧 Construction Trends: 381.3 million square feet of industrial space were under construction nationwide as of May 2024, with significant decreases in new projects breaking ground. 🏗️ Top Markets: Phoenix leads with 9.8% of its stock under construction, followed by Kansas City (4.6%) and Memphis (3.4%). 💰 Economic Impact: Year-to-date industrial sales totaled $19.7 billion by May 2024, highlighting continued investment despite challenges. 💵 Rent Increases: Industrial rents soared to $8.00 per square foot in May 2024, up 750 basis points from the previous year. 📈 Top Performers: Inland Empire led with a 12.6% rent increase year-over-year, followed by Los Angeles (11.6%) and Miami (11.4%). 🏢 Vacancy Rates: National vacancy rate rose to 5.6% in May 2024, reflecting slowing demand and increased supply. 📍 Lowest Vacancies: Columbus had the lowest vacancy rate at 2.7%, followed by Kansas City and Nashville (both at 3.8%). 📝 Leasing Trends: Average rate for new leases signed in the past year was $10.25 per square foot, showing premiums in markets like Miami ($5.55 above average), Los Angeles ($4.71), and the Inland Empire ($3.56). https://lnkd.in/ghi4wHjD

With all of the discussion and the many opportunities available in residential, multi-family, conversions, and the like, there are also opportunities coming up on the Industrial Real Estate side. Once again, doing a bit of investigation reveals some positives for those that know to take the time to do so. (Those that don't need me, or someone dedicated to research, on their team to keep from losing out.) There are plenty of angles to take, such as determining when leases expire and when and where there will be openings. So many opportunities, so little time. One of the marketing projects I worked on for a client was to show tax savings for truck deliveries in parts of Southern California by adding more warehousing closer to the port and train terminals. https://lnkd.in/eBpeYu_4 #IndustrialRealEstate #RealEstate #industrial #leasing #RealEstateInvesting #manufacturing #factory #SoCal #California

Why are For Sale industrial buildings so hard to find in the Twin Cities? John Young, CCIM walks us through the factors contributing to the low supply of industrial space in his new article. “It’s important to plan ahead and start early so you know all of your options,” says Young. https://lnkd.in/g8Qvj7QA #CRE #industrial #realestate #twincities