The Industrial Real Estate Hot Spot
Industrial real estate in port cities has become one of the surest bets for investors and further evidences the bright future of industrial real estate. “When it comes to year-over-year rental growth, port markets saw a 23% increase in asking rent, while non-port markets rose 16% comparing the first quarter of 2021 to the first quarter of 2022,” reports JLL’s Capital Markets industrial group. The activity that surrounds port cities is resulting in a corresponding growth in industrial space. Port cities have many warehouse and cargo storage facilities that contribute to metropolitan GDP growth and allow “record low vacancies and increased competition among investors and tenants.” JLL also reports that even with increasing interest rates that have impacted the sector, the effects on pricing and overall investor demand will not be homogenous across markets.
Miami had the highest year-over-year rent growth from Q1 2021 – Q1 2022 at 53.3% and Los Angeles had the second highest at 45%. These gateway cities are indicative of the promise for investors that is also present in smaller ports and ancillary markets. And, while competition in these markets may be high, it is definitely worth the effort. Trent Agnew, JLL’s industrial co-leader in capital markets, said “Despite the fact that port markets are more expensive, they still present themselves as a better long-term play for investors. The lack of available land for development, as well as other barriers to new supply, is expected to drive property fundamentals well beyond 2022.”
Sago is always seeking attractive investment opportunities in the best markets across the United States, including in American port cities.
Submitted by Matt Schaub