Top 5 Markets for Industrial Transactions

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The industrial sector demonstrated continued strength in 2022 and will likely do so as we continue into 2023. Despite rising interest rates and economic headwinds, more than $72 billion in industrial transactions closed in 2022, data from CommercialEdge shows. This represents a 22.5 percent decrease from the $93.8 billion closed in 2021. The average sale price per square foot averaged $130.03, an increase of 16.9 percent when compared to 2021 when it stood at $111.24.

Unsurprisingly, industrial transactions were concentrated in strategically located markets with a skilled labor force that benefit from good infrastructure and government support with a variety of programs and incentives to attract and retain companies. The table below highlights the top five markets in the country by total sales volume in 2022. We used CommercialEdge data throughout this piece.

1. Los Angeles

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The ports of Los Angeles and Long Beach have set records for number of containers handled in recent years. A combination between strategic location, diverse economy which creates a robust industrial demand including warehouses and distribution centers and excellent infrastructure made Los Angeles a top market for industrial sales. Some 20.4 million square feet across 220 properties was sold for a total of $5.3 billion in 2022, accounting for a 32 percent decrease from 2021, when industrial sales totaled $7.9 billion.

Industrial assets traded at an average of $286.15 per square foot in 2022, a 5.4 percent decrease from 2021, when the average sale price clocked in at $302.41 per square foot. The largest sale in the metro was UBS Realty Investors’ acquisition of 2900, 2901 & 2929 Fruitland Avenue in Vernon, Calif. According to CommercialEdge, Owens-Illinois sold the one million-square-foot asset for $180.8 million.

2. Inland Empire

The Inland Empire boasts the lowest industrial vacancy rate in the country—1.6 percent as of January—and its proximity to major ports and access to major transportation networks made it the hottest industrial market in the nation. Industrial transactions amounted to $5.2 billion in 2022, a 5.9 percent decrease from the $5.5 billion closed during the same period in 2021.

The average sale price for an industrial asset, however, jumped from $190.58 per square foot in 2021 to $288.43 in 2022, accounting for a 51.3 percent gain year-over-year. In one of the largest industrial sales of the past year, United Natural Foods disposed of Meridian Parkway, a 1.1 million-square-foot cold storage facility in Riverside, Calif. IDS Real Estate Group paid $225 million for the property and secured a $124 million acquisition financing from Northwestern Mutual last September.

3. Chicago

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Chicago is located in the center of the country and boasts one of the largest interstate highway systems in the U.S., making it an ideal location for transportation and distribution. The market’s appeal generated heightened industrial activity throughout 2022, resulting in $3.9 billion in sales. This represented a 36.5 percent decrease from 2021, when transactions totaled more than $6.1 billion.

Industrial assets changed hands at an average of $86.45 per square foot in 2022. This accounted for a 7.8 percent increase from 2021, when properties traded at $80.43 per square foot. The largest industrial sale in the market in 2022 was Bally’s acquisition of the Chicago Tribune Freedom Center. Nexstar Media Group sold the 940,000-square-foot printing plant and headquarters for the Chicago Tribune for $200 million.

4. New Jersey

New Jersey is home to the Port of New York and New Jersey, which is the largest port on the East Coast and the third-busiest in the country. The market is also within a day’s drive of 40 percent of the U.S. population, making it an attractive location for companies looking to distribute their products to a large customer base. Industrial sales in 2022 totaled $3.3 billion, or a 10.4 percent decrease from 2021, when transactions amounted to $3.7 billion.

The average sale price for an industrial asset hit $188.14 per square foot in 2022, up 1.5 percent when compared to 2021, when the average sale price was $191.10 per square foot. In the market’s largest transaction, Sitex Group paid Driscoll Foods $172.5 million for 6 West Belt Parkway in Wayne, N.J., in November.

5. Phoenix

Phoenix has been benefitting from overflow demand thanks to its proximity to nearby Southern California industrial markets, resulting in one of the largest lease spreads —16.5 percent as of January—among U.S. industrial markets. Close to $3 billion in industrial transactions closed in 2022, a 45.5 percent decrease from the $5.5 billion sold in 2021.

Meanwhile, industrial deals closed at an average sale price of $168.77 per square foot, a 1.6 percent increase from 2021, when the average sale price was $166 per square foot. California State Teachers’ Retirement System’s $156.5 million purchase of Elliot 202, a nearly 2 million-square-foot recently completed asset in Mesa, Ariz., was the largest industrial transaction in Phoenix in 2022. The seller was Marwest Enterprises, which completed the asset in August last year.