The industrial sector continues to be the darling of the pandemic-era commercial real estate market, with deal activity rebounding to pre-pandemic norms — even if year-to-date volume doesn’t show it.
Industrial transaction volume, according to Real Capital Analytics’ (RCA) Capital Trends U.S. Industrial report, stands at $35.4 billion year to date through May. That’s down 14% year over year, though that figure is a bit misleading.
Early in 2020, before the pandemic fully took root in the U.S. and ground deal volume to a halt, Prologis engaged in a pair of entity-level deals that pushed deal volume sky high, inflating last year’s total. No entity-level deals have closed in the industrial market since, hence the decline in the headline statistic.
Looking at recent historical trends instead serves better context. From 2015 to 2019, deal volume averaged $30.1 billion from January through May. This year has bettered that average figure without entity-level movement signaling the intense present pace of investor demand. Individual asset sales only add to the rosy picture. Sales of individual buildings during the first five months of the year averaged $17.5 billion from 2015 to 2019, compared to $24.8 billion this year — a whopping increase of 42%.
Prices have also reflected the robust demand for industrial properties. RCA’s Commercial Property Price Index for the industrial sector jumped 9.5% year over year in May.
