Industrial property sales in the Bay Area totaled $169 million in January, leading the nation

The Bay Area led the nation in industrial real estate transactions in the month of January, new data shows.

Roughly $169 million worth of Bay Area industrial properties traded hands in the first month of the year, according to the data, released by property management software Yardi Feb. 24. That figure puts the Bay ahead of every other market tracked by the firm; it was followed by New Jersey, which recorded $149 million in transactions, and Indianapolis, at $112 million. Los Angeles and the Inland Empire, to Los Angeles’s east, recorded $22 million and $33 million worth of transactions, respectively.

The Bay Area’s historically solid industrial market boomed during the first two years of the pandemic, when demand for storage and e-commerce fulfillment space skyrocketed in part because of ongoing supply chain disruptions. Demand began to pour in from users outside of the traditional e-commerce and fulfillment sectors, and vacancies hit historic lows.

That hot streak has begun to even out; though vacancy rates remain low, leasing in the region’s industrial market over the last six months hasn’t quite been defined by the same kind of record-setting fervor that observers saw in 2021. The Bay Area that year recorded a whopping $2.2 billion in annual sales volume, per Yardi data; if it can sustain the value of transactions recorded in January2023 through the remainder of the year, it could best that record. My colleague Ashley Fahey reported at the end of last year that while experts do expect inflation and rising interest rates to impact industrial properties, the sector is viewed as more resilient than, say, office.

Investors remain interested in the Bay Area’s industrial sector in part because of the steep on-ramp to entry, observers have told me: that is, how difficult it is to get any new industrial product built in the area.

Building costs have risen considerably over the last three years, driving up the cost of new product, and some municipalities — Contra Costa County, for example — have enacted bans on new industrial development, saying logistics users largely do not benefit their host communities and can be harmful for the environment.