Electric Vehicles Put a Charge in Industrial Growth

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The electric vehicle industry is set for growth as government incentives and competition among automakers drive market share, according to the latest CommercialEdge report. The Biden administration has prioritized climate-friendly technology, passing the Inflation Reduction Act which offers incentives to EV manufacturers and tax credits for consumers who buy American-made EVs.

Tesla is the dominant player, but competition is increasing with automakers like Ford and German companies investing heavily in EV production in the U.S. to take advantage of the incentives. At the same time, BMW and Mercedes have announced billion-dollar investments in battery and EV production plants in South Carolina and Alabama.

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As of February, the nation’s under-construction pipeline featured 667.5 million square feet of industrial space, representing 3.7 percent of existing inventory. The largest pipelines on a percentage of stock basis were found in Phoenix (15.6 percent, 54 million square feet), Dallas-Fort Worth (6.7 percent, 59 million square feet) and Charlotte (5.8 percent, 17.2 million square feet). Meanwhile, another 73.4 million square feet were delivered in the first two months of the year.

Industrial sales volume year-to-date in February totaled $3.9 billion, with assets trading at an average of $150 per square foot, CommercialEdge data shows. That represents a noteworthy decline from the previous year’s figure of $9.1 billion.

Shipping ports lead rent growth

National in-place rents for industrial space averaged $7.12 per square foot at the end of February. Average rents increased by 690 basis points year-over-year and two cents month-over-month. Port markets and those nearby—especially in Southern California—continued to lead the country in terms of rent growth, with the Inland Empire (15.6 percent increase), Los Angeles (11.6 percent), Boston (10.7 percent) and Orange County (9.2 percent) posting the highest increases.

At the same time, the national industrial vacancy rate was 3.9 percent at the end of February, a 10-basis-point increase from the previous month. Despite more than a billion square feet of new stock being added to the total inventory over the last 10 months, vacancy rates remain at an all-time low. The availability of rental stock was tightest in ports and inland logistics centers; Columbus (1.1 percent), the Inland Empire (1.7 percent), Phoenix (2.3 percent) and Indianapolis (2.5 percent) had the lowest vacancy rates in the country.

Read the full CommercialEdge report.