February 10, 2022 | Katie Murar | Bisnow<\/p>\n
The record-breaking pace of the U.S. industrial sector is not expected to let up in 2022. Rents, already at sky-high levels, are slated to jump another 10% this year, according to a report from one of the country\u2019s largest industrial landlords.\u00a0<\/p>\n
San Francisco-based\u00a0Prologis\u00a0released the latest edition of its\u00a0Industrial Business Indicator\u00a0this week, which takes a pulse of industrial demand each quarter by assigning a score, with any score above 50 indicating growth is occurring. The reading for the fourth quarter of 2021 was 66.8, continuing the growth trend in 2021, with three prior scores of 66, 71 and 66, respectively.\u00a0<\/p>\n
The report found that U.S. vacancy dropped to an all-time low of 3.4% last quarter, and is expected to remain at historic lows through 2022,\u00a0Logistics Management\u00a0notes. Market rents, meanwhile, jumped 6.5% between Q3 and Q4, and surged more than 20% overall in 2021.\u00a0<\/p>\n
Industrial users set a new absorption record last year, taking 410M SF, up 85% over 2020. There are 390M SF of industrial space in the development pipeline, according to Prologis. Of that, 70% is pre-leased.\u00a0<\/p>\n
Surging demand will continue to place pressure on national\u00a0supply chains. Prologis said those supply chains will need to expand by at least 15% \u201cto accommodate normal inventory levels and foster resilience against future disruptions.\u201d<\/p>\n
In order for that to happen, \u201cproduction and distribution bottlenecks need to correct so that goods may flow through supply chains in a more predictable manner,\u201d Prologis Head of U.S. Research Heather Belfor said in an interview with Logistics Management.\u00a0<\/p>\n
About 800M SF of industrial space is needed to restore supply levels to pre-pandemic norms, Belfor said.\u00a0<\/p>\n
Demand for warehouse and distribution space as a result of\u00a0skyrocketing e-commerce demand, and an ongoing push for \u201csafety stock\u201d to combat supply chain disruptions, sent the industrial sector to record highs in 2021, according to a\u00a0Q4 report\u00a0from\u00a0CBRE. Average asking rents surged 11% year-over-year to a record $9.10 per SF in 2021.\u00a0<\/p>\n
Prologis is not immune to the challenges that come with tight market conditions.\u00a0<\/p>\n
\u200b\u200b\u201cSpace in our markets is effectively sold out,\u201d Prologis Chief Financial Officer\u00a0Thomas Olinger\u00a0said in the\u00a0company\u2019s Q3 earnings\u00a0call.<\/p>\n
The firm is also reaping the rewards that come with record demand. Prologis was behind what was reportedly the most expensive\u00a0industrial sale last year when it sold the Pompano Business Park in\u00a0Florida\u00a0for $239.2M. The sale is part of\u00a0Equus Capital Partners\u2019 purchase of a 5.4M SF nationwide Prologis portfolio for $930M, according to\u00a0The Real Deal.<\/p>\n
<\/p>\n
The record-breaking pace of the U.S. industrial sector is not expected to let up in 2022. Rents, already at sky-high levels…<\/p>\n","protected":false},"author":3464,"featured_media":162172,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"single-article.php","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[2806,3010,2939,2814,2737,2965],"tags":[],"class_list":["post-168954","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-asset-class","category-asset-manager-news","category-commercial-real-estate","category-industrial","category-offering-type","category-performance"],"acf":[],"yoast_head":"\n