MarketSnapshot: Multi-Tenant Industrial

The multi-tenant industrial sector continued to show resilience in third quarter 2024, reporting $16.4 billion in transaction volume. This represents a 1.7% quarter-over-quarter increase, although year-over-year activity was down by 8.0%. Year-to-date, the industrial investment market has logged nearly $45.9 billion in sales, but due to a sluggish first quarter, 2024’s annual totals are unlikely to exceed 2023’s performance levels. Driven by a healthy mix of portfolio and single-asset transactions, the Southeast was this quarter’s top regional performer, with $4.3 billion in recorded trades.

Compared to other multi-tenant sectors, the industrial market reported the most significant cap rate increase during third quarter. Following a 25-basis point jump, the current average now sits at 6.30%, which is the highest since mid-2019. Average cap rates across the regions are separated by 178 basis points, anchored by the West at 5.68% and the Midwest at 7.47%. With the exception of the Mid-Atlantic region, which reported a negligible decrease, all regions witnessed increasing cap rates during the last three months.

Compared to 2023, buyer distribution this year has held steady, with all investor groups reporting consistent year-to-year levels of acquisition activity. Private investors continue to lead the pack, representing half of all multi-tenant industrial buyers. Institutional investors, with 28% market share year-to-date, continue to remain active in the sector as well. International buyers and REITs, with under 10% market share each, have been focused less on multi-tenant industrial assets than in years past.