Key Takeaways:
- The national average in-place rent for industrial space reached $8.60 per square foot in June, up $.06 from the previous month and 6.2% year-over-year.
- 341.8 million square feet of industrial space is being built nationally & 146.6 million square feet has been completed so far in 2025.
- The average industrial vacancy rate at a national level ticked up to 9%, increasing by 50 basis points month-over-month and 290 basis points year-over-year.
- Orange County, Calif., boasts the highest average in-place rent at $16.80 per square foot.
- Minneapolis-St. Paul recorded the highest average sale price in the Midwest.
- Industrial pipelines in Dallas-Fort Worth and Houston doubled year-over-year, signaling a new wave of industrial expansion in the Texas Triangle.
The unprecedented level of industrial development seen in recent years has generated concerns of oversupply, and growing vacancies during the last year seemed to confirm them. The amount of industrial space currently being built is almost equivalent to pre-2020 levels, but with a different composition, according to our latest U.S. industrial market report.
Trends & Industry News
Industrial Construction Pivoting to New Categories Amid Challenges
The rapid expansion experienced by the industrial sector between 2020 and 2024 was an all-time record in the industry’s history, delivering more than 2 billion square feet of new supply nationwide. The stage was already set for a robust cycle of expansion even before the onset of COVID, but ensuing supply chain issues and the e-commerce boom compounded the surge in development. Vacancy rates hovered around 4% in the first years of the decade, with some high-demand markets experiencing vacancies as low as 2%. Given these conditions, numerous speculative developments were started with the expectation of being pre-leased long before completion.
However, the large amount of new supply delivered since has pushed the national industrial vacancy rate up to 9% as of June — an unprecedented rate so far this decade. Furthermore, normalized demand is making it more difficult for recent developments to be absorbed, and tariff uncertainties are currently driving companies to look for supply chain optimizations rather than locking in leasing decisions.
“The normalization of the construction pipeline has been anticipated, or even welcomed, for some time now. The pace of deliveries during the COVID spike wasn’t sustainable, yet the market has recently found new opportunities in the form of data centers and battery manufacturing plants. These will also fluctuate as the correct amount of space needed is determined.”
Peter Kolaczynski, Director, Yardi Research
Factors such as reshoring and nearshoring of manufacturing operations, expansion of data center capabilities, as well as continuing shifts to e-commerce and omnichannel retail continue to be the main driving forces behind industrial development. Nevertheless, unique challenges threaten to slow the pace of new supply. For example, logistics and retail are hindered by tariff uncertainty with the risk of increased costs continuing to influence leasing decisions, despite fears of a full-scale trade war being assuaged. Currently, manufacturing remains strong, but key industries that have driven much of the recent expansion — such as electric vehicles and green technology — may be affected by tax credit cuts. And, while firms may find it increasingly worthwhile to reshore manufacturing capabilities, state-of-the-art manufacturing facilities often take years to plan and build.
At the same time, data centers are undergoing a significant boom, but challenges from resource usage, availability and access remain. Moreover, beyond the difficulties in powering and maintaining data centers, much of the recent growth within the industry has been driven by large language models (LLMs). While LLMs enjoy increasingly wider adoption and become more sophisticated, setbacks such as concerns regarding return on investment, competition from Chinese companies and legal challenges may affect the sector’s enduring growth. The current administration plans to assist artificial intelligence companies through some of these challenges with a recently released “AI Action Plan,” which aims to turn the U.S. into a global powerhouse of AI and drive further growth in the industry.
Rents & Occupancy
Demographic Growth & Logistics Demand Drive Industrial Rent Growth in Atlanta
National in-place rents for industrial space reached $8.60 per square foot in June, ticking up $.06 month-over-month and 6.2% in the last 12 months.
The top markets experiencing the most rent growth generally fall into two categories — either port markets or growing logistics hubs in the Sun Belt. Within the former category, Miami has the fastest-growing rents in the nation, up 9.4% annually. However, Atlanta — a member of the latter group — is hot on its heels with in-place rents growing by 8.5% year-over-year (Y-o-Y).
In Atlanta, the average cost of a lease signed in the last 12 months was $8.79 per square foot, representing a $2.44 premium compared to the average in-place rent. Notably, the city’s growth as an industrial hub is twofold, driven both by its status as one of the fastest-growing metro areas in the nation, as well as its central location in the nation’s fastest-growing region. Additionally, Atlanta also: houses one of the busiest airports in the world, stands at the conjunction of several major highways, has access to rail lines and benefits from its proximity to the Port of Savannah. Accordingly, rent growth here has been especially driven by third-party logistics providers targeting the market as a major regional logistical center.
Our industrial real estate market report shows that the average national vacancy rate reached 9% in June, marking a 290-basis-point (bps) increase annually.
Plus, the national lease spread between leases signed in the last 12 months and the average in-place rent stood at $1.57 per square foot — continuing to shrink in recent quarters as market conditions have offered tenants the upper hand in lease negotiations.
Bridgeport, Conn., boasted the widest lease spread nationally at just under $5 per square foot. Several other markets also recorded new lease spreads larger than $3, including: Boston ($3.53 per square foot); New Jersey ($3.48 per square foot); Charlotte, N.C. ($3.34 per square foot); and Miami ($3.33 per square foot).
Supply
Tax Bill Places EV Battery Plants into Question
In June, 341.8 million square feet of industrial space was under construction nationwide, representing a 1.7% increase in current stock. Year-to-date, 146.6 million square feet of space has been delivered nationwide, according to our U.S. industrial market report.
The so-called “battery belt” — a region stretching from Georgia to Michigan where several high-profile electric vehicle battery plants are under development — has driven a significant share of the manufacturing space pipeline in recent years. While some electric vehicle (EV) manufacturers were already reconsidering their investments due to declining EV sales, the belt is now further threatened by the One Big Beautiful Bill Act. The bill will likely lead to a further decrease in demand for EVs by eliminating tax credits, while also reducing and tightening standards for tax credits for battery manufacturers.
Although the effects of the bill will play out in the longer term, some projects that relied on the tax credits to remain financially viable may be put into question. That said, some last-minute additions to the bill included minor concessions that may have saved some projects, as was the case with a Ford plant in Marshall, Mich. Otherwise, the future of other battery plants remains uncertain.
Transactions
Sale Prices Normalize in Southern California Markets
Year-to-date industrial transactions totaled $27.6 billion nationally as of June, with an average recorded sale price of $130 per square foot, our industrial property market report shows.
After a protracted growth period in sale prices across Southern California, the rush seems to have finally cooled: Average sale prices in the Inland Empire, Orange County and Los Angeles have all slipped from their previous highs. The average price in the Inland Empire now sits at $247 per square foot, down from an all-time high of $287 in 2022, although current figures are still up 6% Y-o-Y. Similarly, average sale prices in Orange County slipped from $343 per square foot in 2022 to $301 three years later. Along the same lines, the peak in the Los Angeles industrial market was $316 per square foot in 2023, but has since dropped to $279 in transactions recorded so far this year.
While tariffs may negatively affect demand for industrial space, our industrial real estate outlook does not anticipate the trend of price reductions to continue. While port traffic may soften, port markets are critical to the nation’s commerce, and new industrial developments also face unique challenges in Southern California. Roadblocks such as local pushback, scarcity of developable land and new laws targeting building standards and road freight routes will indirectly boost demand for existing properties by hampering new developments — with the Inland Empire being particularly affected.
Western Markets
Orange County Leads Nation for Average Rent Costs
In June, Phoenix boasted the largest amount of industrial space underway regionally at 17.4 million square feet, although that figure is less than half the amount that was under construction a year prior. Even so, the Valley of the Sun is still looking at a sizable expansion of industrial inventory as projects currently under construction and in the planning phase will expand the market’s inventory by 12.6% — the largest projected expansion nationwide. The Inland Empire came next in terms of industrial volume underway among Western markets. The 8.3 million square feet being built here represents an increase of 71% compared to the 4.8 million from June 2024. Nearby, Los Angeles and Orange County also saw upticks in their respective pipelines year-over-year, per our industrial property outlook. This variation in pipeline totals shows that a new wave of industrial development may be building up as companies navigate complex trade situations and evaluate absorption rates.
Meanwhile, a familiar trio of Western markets — Orange County, Los Angeles and the Bay Area — still leads the nation in terms of average lease rates in our U.S. industrial market report. The average in-place rent in Orange County stood at $16.80 per square foot in June, up 7.8% from last year, with prices in LA and the Bay Area also ticking up annually. Further north, Seattle had the widest lease spread at a regional level with $2.67 per square foot, followed by Orange County’s $2.55-per-square-foot premium for leases signed in the last 12 months.
Year-to-date industrial sales in Los Angeles total $1.16 billion for the fourth-largest sales volume nationwide and the largest in the Western U.S. Not far behind, sales in Phoenix also surpassed $1 billion last month, with space here trading for an average of $176 per square foot. Generally, Western markets commanded the highest average sale prices in the nation with the region being home to six of the seven priciest markets by average price per square foot. Orange County leads the nation in that regard with a price tag of just over $300 per square foot, which is up $18 from May but down 12% Y-o-Y.
Industrial vacancy rates among markets in the Western U.S. trended below the national average in June: Orange County had the lowest vacancy rate regionally at 6.8%, followed by the Bay Area’s 7.8% and the Inland Empire’s 8.0%. However, all of the region’s markets included in our study saw rising vacancies annually with increases ranging from 90 bps in Los Angeles to 300 bps in Denver.
Midwestern Markets
Twin Cities Stand Out With Highest Rents & Sale Prices Regionally
Average lease rates in the Midwest continued to trend below the national average in June. Here, the Minneapolis-St. Paul market recorded the region’s highest average in-place industrial rents at $7.39 per square foot, followed by Detroit’s $7.28 per square foot and Chicago’s $6.54 per square foot. At the same time, average rents in Columbus rested at $5.43 per square foot, trending up 10% Y-o-Y for the largest increase regionally, as well as the fourth-largest nationally. Notably, lease spreads in the Midwest remained narrow. Premiums for leases signed in the last 12 months stood below the national average of $1.57 in all of the region’s markets.
The vacancy rate in Columbus rested just below 11% in June, marking an increase of 720 basis points Y-o-Y — the second-largest vacancy hike nationally besides Miami. Likewise, vacancies in Indianapolis reached 10% after a comparable increase of 500 bps. The remaining Midwestern markets in our U.S. industrial markets report recorded vacancy rates below the national average, such as the Twin Cities’ 8.1%, as well as the 7.6% rate in both Cincinnati and St. Louis.
In June, Midwestern markets remained some of the most affordable markets in our industrial real estate report in terms of average sale prices. In particular, Cleveland industrial transactions resulted in the lowest average sale price per square foot at $36, as well as the lowest sales volume among the major markets in our report at $96 million. At the opposite end of the spectrum, the region’s priciest industrial space was in the Twin Cities ($107). Then, after a sizable 31% Y-o-Y increase, Columbus, Ohio, had the Midwest’s second-highest average sale price of $104 per square foot, which is still well below the national average of $130 per square foot. Chicago boasts the largest sales volume in the Midwest at $1.48 billion, although the average sale price in the market rested at $95, almost flat year-over-year.
The amount of industrial space under construction in the Twin Cities soared from just 1 million square feet last year to approximately 3.4 million square feet at the end of June 2025. This fresh wave of investment — in conjunction with the market’s high industrial rents and average sale prices — positions the Minneapolis-St. Paul metro as one of the region’s most fast-paced industrial markets. Elsewhere in the Midwest, pipelines continued their downward trend. For instance, Chicago’s industrial pipeline is down 28% Y-o-Y to 7.4 million square feet, while industrial stock under construction in Columbus and Cleveland dropped by 38% and 18%, respectively.
Southern Markets
Industrial Expansion Picks Up in Texas Markets
The Texas Triangle still drives the lion’s share of industrial development in the South with durable demand, even considering the record expansion of previous years. After a temporary dip, Houston’s market expansion is picking up once again, with the market’s pipeline up 5% month-over-month and spiking more than 110% Y-o-Y to reach 14.8 million square feet of space underway. Meanwhile, Dallas-Fort Worth concentrates the largest amount of stock under construction out of all markets nationally with more than 30 million square feet. In fact, the Metroplex’ current pipeline represents an annual increase of 93% and is nearly double the amount in Phoenix, which is the market with the second largest pipeline in the nation. Industrial property outlooks highlight Memphis and Atlanta as the South’s next-most active industrial markets in terms of raw square footage under construction with 12.9 million and 10 million square feet being built, respectively.
Back in Texas, Dallas is also a focal point for investors in terms of industrial sales with year-to-date transactions in the market totaling $1.64 billion — close to tying New Jersey for the first place nationally. That said, the current figure is an 18% decrease in year-to-date sales compared to last year, with the average price per square foot also shrinking from $152 to $108. So far this year, Baltimore has the highest average sale price in the region at $179 after a 34% yearly hike. This price is followed by Atlanta’s $159, making them the only Southern markets with average sale prices above the national average. Memphis remains the most affordable Southern market for industrial transactions, with an average price per square foot of $70.
In June, Southern markets continued to stand out with their rent affordability when compared to the national average in our U.S. industrial market report, with stand-outs such as Memphis ($4.23 per square foot), Atlanta ($6.35 per square foot) and Dallas-Fort Worth ($6.52 per square foot). The notable exception to this rule is Miami, where in-place rents average $12.86 per square foot of industrial space — more than $4 above the national average and the fourth-priciest nationwide. Significantly, the rate for leases signed in the last 12 months in Miami stands at $16.19 per square foot — the second-highest rate nationally — translating into a sizable new lease premium of $3.33 per square foot. The new lease spread in Charlotte in June also hovered around $3.3 per square foot, highlighting these two markets as the region’s most dynamic for recent industrial leases.
The tightest Southern market in June was Atlanta with 8.2% of industrial space in the market standing vacant. This may indicate that occupancy in the market is reaching equilibrium as the current rate shows a significant increase of 250 bps annually, but a decrease of 20 basis points compared to May 2025. Charlotte, Baltimore and Nashville also saw vacancies climbing sharply over the last 12 months before stagnating or contracting in June. Meanwhile, three Southern markets with vacancies above the national average — Memphis (12.6%, the highest rate nationwide), Miami (11.8%, third nationwide) and Dallas (10.9%, sixth nationwide) — saw vacancies tick up month-over-month.
Northeastern Markets
Rents Continue Climbing in Northeast’s Port Markets
Bridgeport remains one of the tightest industrial markets nationwide with a vacancy rate of 4.9%, down from the 5.5% it recorded in last month’s U.S. industrial markets report. While that’s an increase of 140 bps in the last 12 months, the market still offers little leeway for tenants given ongoing market conditions. At the same time, vacant industrial properties in Philadelphia total 7.4% (also situated below the national average) while Boston’s rate stood at 10.6%, flat month-over-month and up 180 bps annually.
Average in-place rents maintained their upward trajectory regionally. Rents in New Jersey were up 8.3% Y-o-Y to bring the rate to $11.86 per square foot and claim the title of the region’s most expensive market. Boston came next at $11.38 per square foot, up 6% in the last 12 months, while rents in Bridgeport also increased by 5.5% in the same timespan. Notably, Northeastern markets commanded the widest new lease spreads nationwide. Leases signed in the last 12 months in Bridgeport cost an extra $5 per square foot compared to in-place leases, marking the widest lease spread out of all markets in our report and a further increase from last month’s $4 spread. Similarly, new leases in Boston and New Jersey also cost an additional $3.50 per square foot for the second-widest spreads nationwide. As the unprecedented oversupply of industrial space subsides and leasing appetite picks up once again, Northeastern port markets are finding themselves at the forefront of this rebalancing.
While leasing activity is accelerating, sluggish development continues to define major Northeastern markets. As an example, construction starts in Boston and Philadelphia are still being outpaced by completions, leading to annual drops in their respective pipelines of 50% and 26%. New Jersey currently has the region’s largest industrial pipeline at 6.7 million square feet. This amount is an increase from June 2024’s 6.4 million, but still below other major markets in other regions.
Still, New Jersey retained its lead as the most active market for industrial transactions nationwide, with a total sales volume reaching $1.69 billion year-to-date. The average sale price in the market stands at $251 per square foot, which is $5.10 cheaper compared to year-to-date transactions as of June 2024, but still the third-highest average price in the U.S. Boston came in second regionally with a sales volume of $538 million, followed by Philadelphia with $390 million.
Economic Indicators
Tariff Pressures Begin to Materialize, Despite Steady PPI Readings
The Bureau of Labor Statistics’ producer price index (PPI) held steady in June, remaining unchanged month-over-month and increasing by 2.3% year-over-year. While upward price pressure from tariffs began to be felt in some areas — such as the cost of goods, up 0.3% month-over-month — decreases in other areas such as services (down 0.1% month-over-month) offset these increases in the wider index.
Certainly, a flat inflation report is welcome news, but some areas of concern remain as new tariffs are starting to affect the wider economy. Namely, products with a higher degree of exposure to customs duties saw significant price increases. These include communication equipment (up 0.8% month-over-month) and household furniture (up 1% month-over-month), with apparel and footwear also seeing average price hikes. Finally, more than half of the price decreases in the services industry is the result of a 4.1% decrease in the price of hotel rooms.
Methodology
The monthly CommercialCafe national industrial real estate report considers data recorded throughout the course of 12 months and tracks top U.S. industrial markets with a focus on average rents; vacancies (including subleases, but excluding owner-occupied properties); deals closed; pipeline yield; forecasts; and the economic indicators most relevant to the performance of the industrial sector. Listing rate and occupancy information was based on Yardi Research data.
- Average Rents: Provided by Yardi Market Expert, a cutting-edge service that uses anonymized and aggregated data from other Yardi platforms to provide the most accurate rental and expense information available.
- Vacancy: The total square feet vacant in a market, including subleases, divided by the total square feet of industrial space in that market. Owner-occupied buildings are not included in vacancy calculations.
Stages of the supply pipeline:
- Planned: Buildings that are currently in the process of acquiring zoning approval and permits, but have not yet begun construction.
- Under Construction: Buildings for which construction and excavation has begun.
Sales volume and price-per-square-foot calculations for portfolio transactions or those with unpublished dollar values are estimated using sales comps based on similar sales in the market and submarket, use type, location and asset ratings, sale date and property size.
Year-to-date metrics and data include the time period between January 1 of the current year through the month prior to publishing the report.
Market boundaries in the CommercialCafe industrial report coincide with those defined by the CommercialCafe Markets Map and may differ from regional boundaries defined by other sources.
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