In October, national in-place rents for industrial properties averaged $8.22 per square foot, an increase of 6.8% year-over-year (Y-o-Y), as reported by commercial real estate (CRE) listing network CommercialEdge. While Miami led rent growth at 11% annually, its ascendance is a rare deviation from southern California’s historical dominance. For instance, the Inland Empire, once synonymous with industrial demand, saw the premium on new leases drop from $9.32 per square foot in 2023 to $3.17 this year.

Meanwhile, the broader rent landscape reflects a cooling of once white-hot markets. Even as national vacancy rates inched up to 7.2%, Orange County maintained its position as the tightest Western market, tying with Charlotte, N.C., at a 4.3% vacancy rate. These shifts suggest that industrial tenants — once laser-focused on proximity to consumer bases — are now weighing the suitability of spaces for high-tech adaptations.

Construction Activity Slows in Phoenix & Dallas, but Picks Up in Inland Empire

Developers have scaled back significantly with 358.8 million square feet under construction as of October — down sharply from 2021-2022 peaks. The slowdown mirrors a broader recalibration in the sector as speculative builds cool in the face of stabilizing demand.

However, some regions remain resilient. For example, the Inland Empire in California saw new construction start to recover with 9 million square feet breaking ground in 2024 compared to just 7 million last year. Even so, markets like Dallas-Fort Worth and Phoenix, which were previously at the forefront of the industrial pipeline, are witnessing notable slowdowns, thereby reflecting broader caution among developers.

Dallas & Chicago Post Sales Gains, SoCal Faces Decline

Year-to-date, $49.2 billion worth of industrial properties changed hands at an average of $129 per square foot. While total sales volume slightly lags behind 2023 figures, the anticipated easing of interest rates is expected to reignite investor interest.

Regionally, markets like Dallas-Fort Worth and Chicago have seen transaction volumes rise by $1.1 billion and $678 million, respectively, while southern California has cooled significantly. In particular, Los Angeles recorded a $2.2 billion drop in sales volume, marking a stark contrast to its prior dominance in the sector.

For more information and a complete breakdown of the data, check out CommercialEdge’s original report.