Warehouse/Industrial Benchmark Report

August 21, 2023

Available inventory in the industrial space remains tight throughout the nation and more so in the Southeastern United States. The surge of demand for industrial property coming out of the COVID pandemic put inventory and supply sharply behind demand and the arrival of rising interest rates and construction cost inflation in the summer of 2022 caused industrial development to slow substantially. The combination of heightened demand and slow industrial development starts have had a profound impact on the sale price and lease rates of existing space throughout the industrial sector. Vacancies in the Southeast came in at 4.2% which is lower than the national average of 4.5%. Both metrics remain lower than historical averages. Closer to home, Atlanta recorded a vacancy rate of 2.8% for Q2, 2023 and Savannah recorded a vacancy rate of 4.5%, which includes 10 million square feet which has been delivered to the market in recent months. With the prolonged tightening of inventory the sector is starting to see lease rates jump 10-20% a year. Sales volume for the sector saw a sharp decline in the first half of 2023 due to lack of availability. However, the pervasive lack of inventory across the nation of industrial property still helped sales price per square foot to continue to grow.

Industrial properties still remain a highly sought after asset among investors further compressing cap rates and increasing the sales price on stable, performing properties and portfolios. With recent announcements of Hyundai Motor Company and Rivian in Georgia and Scout EV (Volkswagen) in Columbia, SC, we expect demand for industrial to further increase in the CSRA as parts suppliers look to co-locate with these manufacturers in Morgan County, GA; Savannah, GA; and Columbia, SC.