America's Property Tax Advisor

Industrial - Real Estate's Hottest Asset Class


Industrial properties have been an investor darling during the pandemic as the boom in e-commerce sales fuel increasing demands for warehouse space.


Real estate taxes are one of the single largest recurring expenses for any owner of industrial property. With the booming market, it’s crucial to take necessary steps to ensure property tax assessments are correct and fair.


Sales Volume and Prices Skyrocket


Nationally, there have been $51.2 billion of industrial sales this year through October, with 2021 already surpassing last year’s sales volume, according to a report by CommercialEdge.


The average sale price of industrial assets has climbed all year and now sits at $110 per square foot, an increase of 25% over 2020. The average national sale price has increased each quarter this year, from $96 per square foot in the first quarter, to $108 in the second, and $120 in the third quarter.


Average industrial sale prices have increased in nearly every market surveyed. Of the major markets, the largest increase can be found in:




Detroit (84%)



Nashville (50%)



New Jersey (49%)



Denver (45%)


Industrial buildings have averaged more than $200 per foot in four markets in 2021: Orange County ($294), the Bay Area ($223), Los Angeles ($221), and Seattle ($204).


Rents Rise


National rents for industrial space averaged $6.37 per square foot in October, an increase of 3.9% over the last 12 months, according to CommercialEdge. Leases signed over the last 12 months cost $7.19 per foot, 82 cents higher than the national average.


Rent growth continues to be highest in port markets and the Sun Belt. The Inland Empire led the country with an increase of 6.6% for in-place rents over the last 12 months, followed by Nashville (6.2%), Los Angeles (5.7%) and New Jersey (5.7%).


Rent growth has generally been weakest in Midwestern markets—Kansas City’s rates fell by 0.2% and St. Louis’s have increased only 1.2%. Two port markets have surprisingly seen weak rent growth. Boston rents have only grown 1.9% and Houston’s 1.7%.


Industrial Vacancy – What Vacancy?


Vacancy rates are generally tightest in Southern California. Only 1% of space is vacant in the Inland Empire, the lowest in the country.


Los Angeles has a vacancy rate of 2.9% and Orange County 3.7%. Midwestern logistics hubs Columbus (1.9%) and Indianapolis (4.2%) also have a low amount of vacant space.


Outside of Southern California, the country’s hottest market is New Jersey, with its 5.7% rent growth driven by a vacancy rate of 3.4%. Tenants have paid a hefty premium to sign new leases over the 12 months, $2.54 more than the market average.


Assessment Challenges


Industrial properties present complex challenges for tax assessment. Any reporting discrepancies in use, location, size, zoning, and dock space can lead to overassessment.


By factoring in proper market rents, vacancies, expenses, and cap rates, valuation reductions can be achieved. It is also important to ensure that the property is not over assessed in comparison to comparable properties - and proactively appealed if necessary.