Despite fears that vacancy in industrial CRE has been increasing, a new report from Crexi suggests that the market is stabilizing and the nation’s top 10 industrial CRE markets still offer significant opportunities for investment. Buyers are also showing a growing preference for eco-friendly buildings.
Heading the list of the highest-ranked metros is Cleveland. According to Crexi, the city is one of the country's largest industrial markets with “unparalleled opportunities for industrial warehouse investment with a strategic infrastructure that attracts logistics and manufacturing businesses,” along with a strategic location. Despite a slight slowdown in leasing activity, the market remains healthy, recording a 2.6% vacancy rate in Q3 2024. Annual asking rent is $4 per square foot, and the median sale asking price per square foot is $50.
Jacksonville came in second. In addition to its strategic location, strong economic growth and expanding infrastructure, the city’s population has surged to the point where it is now the 10th largest in the U.S. with growing private sector employment. The larger population has spurred demand for industrial spaces, especially in logistics and manufacturing. The expansion of the city’s SSA port terminal is also expected to double its capacity by mid-2025, further stimulating industrial demand. Even though its industrial vacancy rate rose to 6.1% in Q3 2024 due to new supply, the report said its stable rental rates demonstrate its resilience. Annual asking rent is $13 per square foot, and the median sale asking price per square foot is $111.
Another port city, Houston, also benefited from its thriving logistics sector and busy port activity. In Q3 2024, it had net industrial absorption of 6.2 million square feet, bringing the year-to-date total to 16.3 million square feet – up 4% from the prior year. Even though the metro had an industrial construction pipeline of 11.1 million square feet, the report said this suggested “a balanced supply-demand dynamic.” Annual asking rent is $11 per square foot, and the median sale price per square foot is $141.
California’s Inland Empire “remains a pivotal hub for industrial warehouse investments,” according to Crexi. Its strength is based on its proximity to major ports that create demand for logistics and supply chain facilities. “In Q3 2024, the region experienced a 70% increase in new leasing activity for properties between 250,000 and 499,999 square feet, indicating strong demand in this segment,” the report noted. Landlords have adjusted asking rates to offset a slight rise in vacancy rates to 7.9%. The region has also benefited from its affordability relative to coastal areas, which has led to a growing population that further stimulates industrial development. The monthly asking rent is $1 per square foot, and the median sale price per square foot is $302.
Orlando’s industrial sector is attracting investors because of the city’s robust economic growth and dynamic real estate market, the report stated. Indeed, 30% of its 4.3 million square feet of new construction in Q3 2024 was pre-leased. Demand remained strong, even though its industrial vacancy rate stood at 8.1%. A fast-growing population and job growth add to its appeal. Annual asking rent is $16 per square foot, and the median sale price per square foot is $222.
Richmond came in 6th as a top industrial location. The report said it is considered an emerging market in 2025, due to its expanding infrastructure and growing population. In addition, it has appeal as a distribution hub because of its strategic location within a 48-hour drive of 75% of the U.S. population. Surging demand led to a decline in the overall vacancy rate that fell to 3.4%, or 30 basis points quarter-over-quarter. Annual asking rent is $8 per square foot, and the median sale price per square foot is $189.
Next up was Las Vegas. “The city had nearly 4 million square feet of new construction delivered in Q1 2024, positioning the market to surpass 16 million square feet of new industrial space by year-end – a record,” the report noted. Vacancy rose to 4.9%, but the report found tenant demand remained strong, with 2.8 million square feet of space leased. The city was helped by its strategic location and a business climate that attracts industrial tenants from the surrounding region. Annual asking rent is $15 per square foot, and the median sale price per square foot is $277.
Louisville is another city benefiting from its strategic location as a logistics hub – reaching 75% of the U.S. population within a day’s drive. In Q3 2024 it had 1.8 million square feet of positive net absorption, pushing down its vacancy rate by 90 basis points to 3.4%. Leasing of around 1.4 million square feet showed strong demand. Annual asking rent is $8 per square foot, and the median sale price per square foot is $70.
Philadelphia also saw its industrial space vacancy rate drop by 60 basis points to 8.6% between Q2 2024 and Q3. The city enjoyed a steep rise in leasing activity, especially from third-party logistics providers. Absorption was also strong, with over one million square feet taken up in Q3, helped by its strategic location along the I-95 corridor that provides access to East Coast markets. Rental rates, however, remained stable. Annual asking rent is $12 per square foot, and the median sale price per square foot is $106.
The final city making it to the top 10 was Denver, which in Q3 2024 saw a 38% increase in leasing volume compared to the prior quarter and a 60% hike from the previous year. Total leasing volume in the quarter exceeded 3.6 million square feet. Vacancy fell quarter-over-quarter by 10 basis points to 7.7%. In the construction pipeline are 24 buildings totaling 3.9 million square feet, which the report said indicates sustained investor confidence. Annual asking rent is $19 per square foot, and the median sale price per square foot is $263.