Following a 1.1 billion-square-foot boom in 2022-2023, industrial deliveries slowed to 358 million square feet in 2024, according to the latest Yardi Matrix U.S. industrial market outlook.
Report Highlights
- National in-place rents for industrial space averaged at $8.30 per square foot at the end of December 2024, up 6.6 percent from December 2023 and 3 cents more than the month prior.
- Nationwide industrial vacancy recorded a 50-basis-point increase from the previous month and averaged 8.0 percent at the end of 2024.
- The gap between in-place rents and new lease rates narrowed to $2.04 per square foot as of the end of 2024.
- The under-construction pipeline featured 349.6 million square feet of industrial space as of December 2024.
Industrial vacancy rates edge higher
In December 2024, the average national rent for industrial properties climbed to $8.40 per square foot, marking a three-cent increase from November and a 6.6 percent jump year-over-year, according to Yardi Matrix.
Port markets remained among the strongest performers in terms of in-place rent growth, though their dominance has become less pronounced. New Jersey led the way with a 9.8 percent annual increase, followed closely by Miami at 9.6 percent. The Inland Empire and Atlanta both saw rents rise by 8.7 percent over the same period. Southern California, once a hotspot for rapid rent appreciation, experienced a noticeable slowdown in 2024.
In contrast, the Midwest posted the weakest rent gains. Kansas City saw in-place rents increase by just 2.0 percent, while Detroit and St. Louis recorded modest upticks of 2.3 percent and 2.4 percent, respectively. Across the U.S., newly signed leases in the past year averaged $10.36 per square foot—$2.20 higher than the overall average. Miami led in lease premiums, with new agreements surpassing market rates by $5.65 per square foot, followed by Bridgeport, Conn., at $4.38 and Boston at $3.70.
At the same time, the national industrial vacancy rate ticked up to 8.0 percent in December, increasing by 50 basis points from the prior month. The gap between in-place rents and new lease rates shrank to $2.04 per square foot, signaling a continued trend toward a more balanced industrial leasing environment.
Industrial construction slows as development pipeline shrinks
At the close of 2024, a total of 349.6 million square feet of industrial space was under construction across the U.S., representing 1.7 percent of the nation’s total inventory, according to Yardi Matrix. However, new industrial starts dropped significantly last year, reaching just 236 million square feet—a 35 percent decline from 2023 and more than 60 percent below 2022 levels. High borrowing costs and softer demand have slowed development activity, with no major rebound anticipated in the near term.
Among the most active industrial markets, Phoenix led the country in construction relative to its existing stock, with 5.7 percent—or 22.3 million square feet—of its inventory underway. Kansas City, Mo., followed with 3.9 percent (11.5 million square feet), while Memphis, Tenn., recorded 3.5 percent (10.5 million square feet) under development. Other notable markets included Philadelphia, where ongoing projects accounted for 2.4 percent (11 million square feet) of inventory, along with Denver at 2.4 percent (6.8 million square feet) and Columbus, Ohio, at 2.2 percent (7.1 million square feet).
Read the full Yardi Matrix Industrial Market Outlook: January 2024.
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