The national industrial real estate market saw in-place rents increase by 7.3% year-over-year (Y-o-Y) to an average of $8.15 per square foot in July, marking an 11-cent rise from June, according to CommercialEdge’s latest Industrial Report.

The Inland Empire in California leads this growth with rents rising 12.4% Y-o-Y. It’s followed by Los Angeles, Miami, and New Jersey, which saw increases of 11%, 9.7% and 9%, respectively. Among non-port markets, Phoenix stood out with an 8.4% increase, closely followed by Nashville, Tenn., and Atlanta, both at 8.3%.

Similarly, new leases signed in the last year are commanding a premium, averaging $10.54 per square foot — $2.39 more than the national average for all leases. High-quality, modern spaces — particularly those equipped for robotics and automation — are in high demand. As a result, many property owners are considering upgrading older, vacant properties to attract tenants. Notably, Miami saw the largest gap between in-place rents and new leases with a difference of $5.76 per square foot. Other markets — such as Charlotte, N.C.; Dallas; and Los Angeles — also saw significant premiums of $3 or more per foot.

While rents are rising, vacancy rates are also shifting: Despite a national vacancy rate increase of 30 basis points month-over-month to 6.4%, certain metros continue to experience low availability. Namely, Bridgeport, Conn. — with just 3.5% of its space available for lease in July — remains the tightest market among the top 30, followed by Charlotte, N.C. (3.7%); Columbus, Ohio (3.9%); and Portland, Ore. (4.8%).

As demand remains strong, the industrial development pipeline is adjusting to this new balance. Accordingly, by July, 379 million square feet of industrial space was under construction, making up 1.9% of the total stock. This follows the delivery of more than 1.1 billion square feet between 2022 and 2023, which expanded inventory by 5.8%. However, the pace of new deliveries has slowed in 2024. Specifically, only 229.3 million square feet came to market in the first seven months, signaling a deceleration. Additionally, new industrial starts through July amounted to 127.2 million square feet — a notable drop from the 593.2 million in 2022 and 557.4 million in 2021.

In terms of transactions, the industrial sector totaled $3.07 billion through July with an average sale price of $135 per square foot. The Bay Area led in sales volume, followed by Dallas-Fort Worth, Los Angeles, Chicago and Phoenix. Finally, although total sales volume has slowed, average sale prices continue to rise. In fact, CommercialEdge’s report suggests that as the cost of capital decreases, market activity may pick up again without reducing the current price levels.