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FREMONT, CA: Industrial real estate continues to witness strong rent growth and high demand, driven by pandemic-prompted online shopping trends. Industrial rents averaged $6.44 per square foot in January, a 5.1 percent increase over the last 12 months, as per a new CommercialEdge Industrial National Report.
Even though vaccinations ramp up and more people return to more normal-looking lives, demand for industrial is expected to stay strong. New leases signed in 2020 sometimes included premium pricing, with the average rental rate for new leases signed in the last 12 months at $7.50 per square foot. The average vacancy rate was 6.0 percent. Continued demand for industrial space will sustain rent growth as well as drive vacancy rates lower.
"We expect that demand will continue to increase even if e-commerce does not match its blistering 2020 growth rate. E-commerce has a continued role to play, and last year likely signaled a structural shift in consumer preferences more than temporary changes in behavior. Retail as we knew it has changed, and in its place warehousing and distribution have increased in importance," stated analysts. An improving global economy ramped up trade volume and inventory replenishment for retailers will be additional drivers.
Investment activity in the sector is stable and increasing as well. The fourth quarter of 2020 currently has the highest revenue volume of any quarter since Yardi Matrix started gathering industrial data, with $11.9 billion in sales completed. Properties received an average price of $100 per square foot, an improvement of 18.2 percent year-on-year.
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