The U.S. big-box industrial real estate market has shown incredible resilience during the coronavirus crisis and the period of economic uncertainty that followed. The sector attracted over 142 billion U.S. dollars worth of investments in 2022, making it
. Industrial property is a type of commercial real estate that ranges from small lightly zoned buildings—commonly referred to as "flex" properties—to larger office/warehouse properties, to the enormously large "big-box" industrial properties; typically retail establishments such as megastores and supercenters. In March 2023, industrial real estate had a delinquency rate for commercial mortgage-backed securities (CMBS)
Industrial big-box real estate – a mature market
With the coronavirus crisis accelerating the growth of e-commerce, there is a strong demand for big-box industrial properties, which are usually used as distribution centers. The
number of these buildings has steadily increased over the past 10 years to meet the growing appetite. Though the
amount of floor space has also been growing year-on-year, in 2021 and 2022,
the vacancy rate of industrial big-box real estate plummeted, reflecting supply struggling to keep up with demand. Naturally, these strong market fundamentals have led to rental rates in the sector increasing. Rental growth was especially strong in 2022, when
the average square meter rent of big-box properties rose by 1.4 U.S. dollars in just one year.
Focus on the major industrial hubs
The absorption rate is the net change in occupied space over a given period of time and is an easy way to measure leasing activity. It is calculated by summing all the positive changes in occupancy (move ins) and subtracting all the negative changes in occupancy (move outs). Dallas/Ft. Worth, and Houston, TX, were two of the
leading industrial real estate leasing markets in the U.S. with net absorption exceeding 30 million square feet in 2022. Other important industrial and logistics markets include Chicago, IL – important because of its strategic location and easy access to most U.S. states – and Lost Angeles, CA – one of the busiest seaports. Renting an industrial property in Los Angeles, CA cost over 20 U.S. dollars per square foot in 2022,
higher than in any other city.
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