New Industrial Leases Are More Expensive Than Ever

New industrial leases are officially more expensive than ever, with the average new lease clocking in at $1.45 more per square foot than in-place deals.

Data from CommercialEdge shows that the gap between the average lease rate and leases signed over the last 12 months “has never been higher,” creating a “hefty premium for new leases and signaling that average rents will likely continue to grow at a fast clip over the coming years.

The largest gap can be observed in Southern California, with the delta between new and existing leases coming in at $4.89 in Los Angeles, at $4.56 in the highly desirable Inland Empire region, and at $4.38 in Orange County.  It’s a similar story in other coastal port markets like New Jersey ($3.76), Boston ($2.50) and Miami ($1.75).

Just a few inland markets without geographic constraints on new supply saw the inverse of that trend, with new leases costing less than the market average for in-place rents: Kansas City, Denver, and St. Louis.

Leases signed in the last 12 months averaged $8.05 per square foot nationally, while national in-place rents for industrial space came in at $6.60 in July, up three cents from June and 5.3% over the last year. Rents are growing fastest in port markets like the Inland Empire (up 8.7% over the past 12 months), Boston (8%), New Jersey (7.8%), Los Angeles (7%) and Orange County (6/8%).