2019 Net Lease Industrial Sales Volume & Cap Rates

Single-tenant industrial sales volume versus average cap rates, updated quarterly.
Source: Stan Johnson Co. Research, Real Capital Analytics

Fourth quarter 2018 saw a tremendous amount of demand in the single-tenant net lease industrial sector. Nearly $12.0 billion in sales brought the annual total to a record-breaking $31.5 billion, but the momentum was short-lived. First quarter 2019 witnessed a rather dramatic slowing of activity as the market posted below-average sales totals of only $4.5 billion, which puts the market on track to match 2016 sales levels.

Unlike the retail and office sectors, industrial cap rates have begun to rise–a full 12 basis points in first quarter 2019 to an average of 6.39 percent. But current economic conditions are incredibly favorable for investors. And as consumers put more and more pressure on retailers to deliver goods faster and more efficiently, the industrial sector will play a very important role–and that means sustained, if not increasing, demand for warehouses, distribution facilities, and manufacturing buildings.

Already-strong industrial markets like Los Angeles, Chicago, Atlanta, and Dallas will continue to be major logistics hubs. But second- and third-tier markets like Memphis, Tenn., Indianapolis, Ind., East Bay, Cincinnati, and many others will provide outstanding opportunities for investors to purchase newly constructed industrial assets with growing and established companies as they expand their footprints to better reach consumers.

Focusing on business development, industry and client-specific research, and the analysis of local and national market trends, Lanie Beck has been the Director of Research for Stan Johnson Co. since 2013.

—Posted on June 20, 2019