This past week, interest rates on the 1-Year U.S. Treasury Note topped 3.6%, the highest level since 2007. As the U.S. economy enters into the toughest environment for interest rates and inflation in decades, it’s an opportune time to take a look at how the industrial real estate market is performing. Based on the Top 50 metros, the vacancy rate has leveled off at 4.1% among properties of at least 15,000 square feet going into the last month of the third quarter. With availability still historically tight, market rents on these properties are still growing at a near record 12.0% annually. While net absorption remains strong, net deliveries are currently outpacing demand for the first time in nearly two years by 13.1 million square feet.

With regards to sales activity, the median selling price per square foot has skyrocketed by 40% year-over-year to $149 (including 26% over the second quarter), representing the largest annual and quarterly increase on record (CoStar). However, the recent rise in interest rates may already be warding off some buyers as the number of transactions appear to be slowing down. With the Federal Reserve expected to raise interest rates another 75 basis points in two weeks, the thriving industrial market will continue to be tested. But so far, so good.

I N D U S T R I A L   N E W S

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R E G I O N A L   N E W S

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