As industrial tenants flocked to the 2 billion square feet of new space delivered since 2021, many left behind older space. Rather than that older space remaining vacant, other industrial companies are buying it in droves.
A recent CBRE report noted that property sales to industrial occupiers in 2024 increased by 32% year over year. Additionally, sales have resulted in a 5% hike in average prices, which average $152.42 per square foot.
The report noted that a little more than half of occupier acquisitions in 2024 involved pre-1980 buildings. Meanwhile, all buildings purchased by these occupiers in the most active markets were at least 25 years old.
Some of the reasons why occupiers are trading from tenant status to ownership include:
- Long-term cost savings (when loans and mortgages are paid off)
- Tax deductions
- Customization ability
- Avoidance of rent increases and lease terminations
CBRE anticipated that “nearly 21,300 industrial leases are scheduled to expire over the next 36 months, more than 12,600 of which are pre-existing buildings.” With the supply anticipated to increase, CBRE said that occupier acquisitions could account for “a greater share of industrial net absorption.”
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