Phoenix stands out as the best-ranking industrial market in Q3, with most of the market’s points being derived from its accelerated industrial development. In fact, the Valley of the Sun’s industrial inventory has 32.6 million square feet of space underway, constituting an expansion of 8.7%. This represents the largest projected growth nationwide, and a stand-out amid generally dropping pipelines. Other impressive figures, such as the 6 million square feet of space delivered in Q3 alone and a 9.2% year-over-year (Y-o-Y) rent growth also stand testament to the market’s stand-out status.
At #2, Charlotte is continuing to reap the benefits of the e-commerce boom as an emerging logistical center. The market has the second-lowest vacancy out of all markets included in the study at 4.1%. Compounded with the second-highest rent growth in the ranking at 14.3% Y-o-Y, Charlotte stands out as a tight market even as the national trend of normalization continues. After delivering 2.7 million square feet of space in the third quarter, the market now has 6 million square feet of industrial space underway — equivalent to 1.83% of its current inventory — which may provide further leeway as it comes online.
Despite being the smallest industrial market in the study by current inventory, Miami claimed the third-best score in Q3 2024, deriving most of its points from its rising rents and steady vacancy rate. Rents in the Magic City rested at $11.9 per square foot in Q3 2024, up 12.8% from Q3 2023 for the third-highest increase nationally, while the market also recorded the fifth-smallest vacancy increase quarter-over-quarter (Q-o-Q) to reach 4.8%.
Columbus reached #4 thanks to good showings across the board, with a vacancy rate of 5.1% (up from 3.7% in Q3 last year) and deliveries in the last quarter totaling 2.17 million square feet of industrial space. Moreover, online search interest in industrial space across Ohio is up 20% Y-o-Y, also boding well for the Columbus market. Rents were up 8.7% Y-o-Y, bringing the current average rent to $5.0, still the lowest among all top 10 markets.
In fifth place, Atlanta earned its spot on the list with above-average scores in most metrics, including a fifth-best showing in loans maturing this year and a vacancy rate of 6.1%, up 0.4% Y-o-Y. Still, industrial construction here is in line with the national trend, with the market growing by less than 0.5% in Q3 and a further expansion of approximately 1.5% from industrial properties currently in the works.
At #6, Bridgeport boasts a vacancy rate of just 3.8%, making it the tightest market in the study in this regard. Moreover, Park City also held that title in Q3 2023 with a vacancy rate of 3.5%. This comes in the context of a pipeline of less than 500,000 square feet for a market expansion of just 0.22%, meaning the high-demand Connecticut market is likely to retain its high occupancy status in the near future.
As one of Southern California’s most robust industrial areas, the Inland Empire secured a 7th-place finish on our Q3 2024 list. Even as several years of record development pushed vacancies up 0.9% Y-o-Y to 7.3%, new lease premiums remain high in the market. Average rent reached $10.7 at the end of the third quarter, marking the highest Y-o-Y rent increase out of all markets in the study at 16%. Online interest for industrial real estate is also up considerably in the market, even as searches dropped overall in California. At the same time, development has slowed considerably here after the 2021-2022 glut, with deliveries in Q3 2024 totaling 1.1 million square feet and 10.1 million more in the pipeline.
Dallas-Fort Worth earned 8th place in our ranking with stand-out performances in sale prices and Q3 deliveries. The average sale price per square foot over the previous 12 months stands at $123, marking a 12.7% increase from the average sale price during the 12 months prior — the highest increase among all top 10 markets. Additionally, DFW delivered 4.66 million square feet of new industrial stock in Q3 2024, marking the second-largest expansion by square footage. Of course, that figure is less impressive when compared to the market’s total inventory of almost 1 billion square feet of space, and so is the space in the pipeline which totals just under 17 million square feet of space.
Detroit ranks as the 9th-highest scoring market in our analysis. The market’s vacancy rate of 4.6% was the third-lowest in the ranking, though it is trending up after a 0.5% yearly increase. Meanwhile, rents have climbed less steeply in Motor City than elsewhere, increasing by 3.6% Y-o-Y to rest at $6.9 at the end of Q3. The market also recorded the sixth-highest increase in online search volume for industrial real estate.
Closing out the top 10, Orange County scored well for its vacancy rate at the end of Q3, vacancy rate growth, rent growth and loan maturities. At $15.7 per square foot, Orange County has the highest average rent cost out of all 30 major industrial markets on the list, ahead of the Los Angeles market’s $15.0 and the Bay Area’s $13.5. Still, new projects have slowed to a crawl in market, currently encompassing just 780,000 square feet of new space — or a 0.4% expansion of current inventory.
