Stockings Filled: Q3 2024 Industrial Review Delivered

Each quarter presents new opportunities for investors to assess market data and refine their strategies for future real estate decisions. By analyzing key metrics, investors can gain valuable insights into shifting trends and emerging opportunities across the nation. Our team, leveraging data from CoStar¹, conducted an analysis of the top sixty-four U.S. markets with a minimum estimated asset value of $10 billion. These findings provide a snapshot of market dynamics, offering a foundation for informed decision-making in an evolving real estate landscape. The following analysis provides a concise overview of market data estimates and should be complemented with additional research to ensure a comprehensive understanding.

Market Rent Growth

The first growth metric evaluated by our team was market rent growth. Market rent growth continued its slowing trend this quarter with the average at +0.44% compared to +0.52% last quarter. Of the sixty-four markets included, Jacksonville, FL, led quarter-over-quarter rent growth at +3.10%, just over seven times the average. Jacksonville was followed by Cincinnati, OH (+2.26%), Memphis, TN (+1.86%), Minneapolis, MN (+1.69%), and Cleveland, OH (+1.69%). On a year-over-year basis, Jacksonville again topped the list with +9.93% growth, while Minneapolis, MN (+8.02%), Cincinnati, OH (+7.99%), Atlanta, GA (+7.65%), and Orlando, FL (+7.37%) also showed impressive gains. The national average for annual rent growth stood at +4.23%. Los Angeles, CA was the only market to have a decline in rent over the previous year at -3.01%.

Quarter-over-Quarter

1. Jacksonville, FL  +3.10% [+$0.33/SF]
2. Cincinnati, OH  +2.26% [+$0.17/SF]
3. Memphis, TN  +1.86% [+$0.10/SF]
4. Minneapolis, MN  +1.69% [+$0.15/SF]
5. Cleveland, OH  +1.69% [+$0.11/SF]

Year-over-Year

1. Jacksonville, FL  +9.93% [+$0.99/SF]
2. Minneapolis, MN  +8.02% [+$0.67/SF]
3. Cincinnati, OH  +7.99% [+$0.57/SF]
4. Atlanta, GA  +7.65% [+$0.68/SF]
5. Orlando, FL  +7.37% [+$0.96/SF]

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Inventory Growth

The second growth metric our team evaluated was inventory growth. Inventory growth was another metric that has continued to slow this quarter with the average across markets hovering at +2.59% over the past year and +0.42% (+1.68% annualized) over the past quarter. Returning as the top quarter-over-quarter inventory growth market was Savannah, GA, with a +3.54% increase, which was more than double the next top growing market, Las Vegas, NV (+1.67%). Las Vegas was closely followed by Phoenix, AZ (+1.64%), Charleston, SC (+1.45%), and Jacksonville, FL (+1.24%). On a year-over-year basis, Savannah again ranked first with a remarkable +14.91% growth, driven by substantial new completions, like the newly completed 1M square-foot Hyundai EV plant. Other top performers included Charleston, SC (+8.81%), Phoenix, AZ (+8.79%), Las Vegas, NV (+8.54%), and Austin, TX (+8.15%). These figures highlight the continued demand for industrial space in key markets nationwide.

Quarter-over-Quarter

1. Savannah, GA  +3.54% [+4.6M SF, +13 Buildings]
2. Las Vegas, NV  +1.67% [+3.1M SF, +18 Buildings]
3. Phoenix, AZ  +1.64% [+7.8M SF, +43 Buildings]
4. Charleston, SC  +1.45% [+1.6M SF, +6 Buildings]
5. Jacksonville, FL  +1.24% [+2.0M SF, +7 Buildings]

Year-over-Year

1. Savannah, GA  +14.91% [+17.6M SF, +42 Buildings]
2. Charleston, SC  +8.81% [+9.2M SF, +30 Buildings]
3. Phoenix, AZ  +8.79% [+39.0M SF, +191 Buildings]
4. Las Vegas, NV  +8.54% [+14.8M SF, +73 Buildings]
5. Austin, TX  +8.15% [+12.1M SF, +185 Buildings]

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Vacancy Rate Change

Vacancy rates changes remained positive on average; encouragingly, the average quarter-over-quarter change has been halved to +0.21% compared to +0.42% in Q2. Several markets saw notable declines, with Salt Lake City, UT leading quarter-over-quarter reductions, with a -1.02% decrease, followed by Indianapolis, IN (-0.64%), Saint Louis, MO (-0.63%), Houston, TX (-0.36%), and Palm Beach, FL (-0.32%). Year-over-year trends had less markets with declining vacancies, with Saint Louis, MO, achieving the largest decrease at -0.21%, followed by Honolulu, HI (-0.18%) and Grand Rapids, MI (-0.01%). The average annual vacancy change reached +1.70%, slightly lower than the previous quarter’s +1.94%. Reno, NV, and Charleston, SC, recorded the highest vacancy increases both quarterly and annually, with Reno at +1.68% quarter-over-quarter and +7.09% year-over-year, and Charleston at +1.61% quarter-over-quarter and +7.13% year-over-year.

Quarter-over-Quarter

1. Salt Lake City, UT  -1.02%
2. Indianapolis, IN  -0.64%
3. Saint Louis, MO  -0.63%
4. Houston, TX  -0.36%
5. Palm Beach, FL  -0.32%

Year-over-Year

1. Saint Louis, MO  -0.21%
2. Honolulu, HI  -0.18%
3. Grand Rapids, MI  -0.01%
4. Pittsburgh, PA  +0.05%
5. Cleveland, OH  +0.16%

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Industrial Employment Growth

Industrial employment growth remained steady across key markets in Q3 2024 with the top markets remaining relatively similar to last quarter. Las Vegas, NV, led quarter-over-quarter growth at +1.34%, followed by Reno, NV (+1.18%), Orlando, FL (+0.74%), Indianapolis, IN (+0.73%), and Tampa, FL (+0.72%). The quarter-over-quarter growth averaged +0.30% compared to +0.34% in Q2. The markets that saw the largest decline last quarter were Memphis, TN (-0.34%), Minneapolis, MN (-0.41%), and Grand Rapids, MI (-0.66%). On a year-over-year basis, Honolulu, HI, topped the rankings with a notable +10.00% increase, while Las Vegas, NV (+9.68%) followed close behind. The next top markets for yearly growth were Reno, NV (+6.03%), Norfolk, VA (+5.18%), and Miami, FL (+5.08%). Average annual growth dropped to +1.33% compared to +1.43% last quarter.

Quarter-over-Quarter

1. Las Vegas, NV  +1.34% [+1.6K Employees]
2. Reno, NV  +1.18% [+0.6K Employees]
3. Orlando, FL  +0.74% [+1.1K Employees]
4. Indianapolis, IN  +0.73% [+1.2K Employees]
5. Tampa, FL  +0.72% [+1.3K Employees]

Year-over-Year

1. Honolulu, HI  +10.00% [+3.7K Employees]
2. Las Vegas, NV  +9.68% [+10.9K Employees]
3. Reno, NV  +6.03% [+3.1K Employees]
4. Norfolk, VA  +5.18% [+5.2K Employees]
5. Miami, FL  +5.08% [+5.3K Employees]

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Population Growth

The final metric we analyzed was population growth. Austin, TX, led quarter-over-quarter growth at +0.47%, well over the average of +0.20%, followed by New York, NY (+0.42%), Orlando, FL (+0.41%), Charlotte, NC (+0.39%), and Palm Beach, FL (+0.39%). On a year-over-year basis, Austin, TX, ranked first again with a +1.94% increase, closely followed by Orlando, FL (+1.75%), Palm Beach, FL (+1.59%), Houston, TX (+1.59%), and Charlotte, NC (+1.58%). These figures highlight sustained population expansion in high-demand regions, with annual growth averaging +0.77% nationwide. However, it is important to interpret these trends cautiously, as population data could be less accurate over short timeframes. Hartford, CT was an outlier with an estimated population decline of -0.52% over the year.

Quarter-over-Quarter

1. Austin, TX  +0.47% [+11.9K People]
2. New York, NY  +0.42% [+60.0K People]
3. Orlando, FL  +0.41% [+11.7K People]
4. Charlotte, NC  +0.39% [+11.0K People]
5. Palm Beach, FL  +0.39% [+6.0K People]

Year-over-Year

1. Austin, TX  +1.94% [+48.0K People]
2. Orlando, FL  +1.75% [+49.3K People]
3. Palm Beach, FL  +1.59% [+24.3K People]
4. Houston, TX  +1.59% [+118.7K People]
5. Charlotte, NC  +1.58% [+43.9K People]