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Industrial property sales volumes plunged in past 2 months, report says

Double-digit year-on-year declines underscore impact of higher borrowing costs

Industrial property sales volumes plunge in the past 2 months (Photo: Jim Allen/FreightWaves)

The volume of sales of U.S. industrial properties — mostly logistics warehousing — declined by double-digit percentages in September and October from the same periods in 2021, according to data from real estate investment platform Real Capital Analytics (RCA) and services firm Colliers International Group Inc.

Prices for industrial properties rose by double-digit levels over the identical time periods, according to the data. This may be a holdover of strong pricing for deals that were underway before rising interest rates caused capital markets to freeze up and led industrial real estate investors to back away from the table.

In October, industrial sales volumes totaled $13.8 billion, down 19% from the 2021 period, according to the data. The September declines were more pronounced, with volumes falling 34% to $11 billion. 

Meanwhile, industrial prices in October rose 17% year over year, while prices in September increased 18%, according to the data.


The price increases, especially coming off a very strong fall 2021 period for industrial real estate, comes as capital has become scarcer and more expensive throughout 2022 in the wake of rising interest rates. The increases could be a legacy of deals that were already in the pipeline before the market slowed in response to higher rates, said Jack Rosenberg, national director, logistics and transportation, for Colliers’ industrial advisory group.

Aaron Jodka, research director, U.S. Capital Markets at Colliers (NASDAQ: CIGI), said the sales data “lags what we have been feeling on the ground for a number of months,” namely that transaction activity has slowed markedly in response to higher capital costs.

Industrial volumes had a bump in October due to the closing of Prologis Inc.’s (NYSE: PLD) $26 billion acquisition of Duke Realty, Jodka said. However, it wasn’t enough to move the sales needle above October 2021 activity, he added.

Colliers expects monthly volume comparisons to remain negative through the first quarter of 2023. Unlike other real estate asset classes, however, industrial demand remains strong, with occupancies at or near record low levels and rents at all-time highs in virtually every market. The drop-off in investment activity is due entirely to higher borrowing costs, Jodka said.


“Typically, liquidity subsides when fundamentals are weakening, which is not the case [with industrial property] today,” he said.

Indeed, the industrial sector is faring better than the four other asset classes — hotel, office, retail and multifamily. In October, those four classes reported sales volume declines between 28% and 64%. Yet all four also reported year-over-year pricing changes.

RCA’s platform is used by real estate investors to identify possible deals and by tenant brokers like Colliers to get a broad distribution of their available properties. Rosenberg said that RCA is considered the “gold standard” of real estate transaction platforms and that its data is an accurate representation of the market as a whole.

Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.