In July, in-place industrial rents increased to $8.15 per SF, marking a 7.3% year-over-year rise, according to a report from CommercialEdge. This is good news for landlords dealing with a surge in supply. However, the overall industrial market is still below its record highs in 2022.

The Inland Empire, Los Angeles, Miami, and New Jersey experienced the greatest rent growth, with year-over-year increases of 12%, 11%, 9.7%, and 9%, respectively, according to CommercialEdge.

Despite the rise in rents, the industrial real estate sector faces challenges. Nationally, the vacancy rate has increased to 6.4%, a 30-basis-point rise compared to July. Additionally, while actual rents have gone up, the average cost of a new lease has decreased in 2024 by $3.37 per SF in the Inland Empire and by $1.98 in LA. Both markets are significant industrial hubs due to their proximity to ports.

Many industrial landlords have expected a lackluster market at year-end as tenants prioritize cost control over other considerations. Some of this sluggishness is attributed to the more than 1 billion SF of industrial space that came online in the last two years.

Currently, roughly 379 million SF of industrial space is under construction, a decline from 595 million SF under construction at the same time last year. This year, just over 229 million SF has come online, and the pace is expected to continue to slow, according to CommercialEdge.

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