According to the latest CommercialEdge national industrial report, ground has been broken on 145.3 million square feet of industrial space so far in 2024, putting this year on track to match the 195.8 million square feet recorded in 2019. Although this marks a slowdown from the pandemic-driven boom that saw nearly 1.9 billion square feet of space under construction from 2020 to 2023, the current numbers remain consistent with pre-pandemic levels.

Notably, Phoenix leads the nation with 36.77 million square feet of industrial space under construction — more than double the amount underway in Dallas at 16.01 million square feet. Philadelphia follows with 12.38 million square feet, while Kansas City, Mo., leads the Midwest with 10.42 million square feet, just ahead of Chicago’s 10.28 million square feet.

Strong Sales Activity Despite Market Adjustments

Industrial real estate sales in 2024 are on track to match or exceed last year’s performance with $36.9 billion in transactions recorded through August. In particular, sales activity has been especially robust in 18 of the 120 markets tracked by CommercialEdge with these markets already surpassing their 2023 totals. However, it’s important to note that sales data often lags behind current market activity. Meanwhile, recent rate cuts by the Federal Reserve may provide a further boost to capital markets.

Among the top-performing markets, Dallas leads with $2.95 billion in sales through the end of August to surpass the Bay Area’s $2.7 billion. Properties in Dallas traded at $138 per square foot, which is slightly above the national average of $132, but still lower than prices seen in Western markets. One standout transaction in Dallas was the acquisition of a 481,000-square-foot, Class A logistics campus at McKinney National Business Park — a fully leased development that was completed less than two years ago.

Other high-performing markets include Los Angeles with $2.059 billion in sales, Chicago at $1.8 billion and Phoenix rounding out the top five with $1.6 billion in transactions. Southern, Western and Midwestern markets dominate the top five, while New Jersey ranks highest in the Northeast with $1.3 billion in sales activity through August.

Coastal Markets Lead in Rent Growth

In-place rents for industrial space have increased significantly throughout the last 12 months, particularly in coastal regions. For instance, the Inland Empire in California leads the nation with a 12% rent increase, followed by Miami at 10.6%, Los Angeles at 10.1%, New Jersey at 9% and Orange County at 8.3%. Nationally, industrial rents averaged $8.11 per square foot in August, which is a slight dip from July, but up 7.2% year-over-year.

However, the national vacancy rate is climbing: It’s up 30 basis points from the previous month as the market adjusts to the wave of new supply delivered in recent years. This increase follows a period of historically low vacancy rates that hovered around 4% just two years ago.