{"id":4131,"date":"2025-02-19T15:27:44","date_gmt":"2025-02-19T15:27:44","guid":{"rendered":"https:\/\/www.commercialsearch.com\/blog\/?p=4131"},"modified":"2025-11-12T09:56:59","modified_gmt":"2025-11-12T09:56:59","slug":"january-2025-industrial-market-premiums-decrease","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/blog\/january-2025-industrial-market-premiums-decrease\/","title":{"rendered":"New Lease Premiums for Industrial Indicate Further Normalization"},"content":{"rendered":"

With the record industrial expansion during the pandemic now behind us, the market is busy absorbing the new supply and reaching equilibrium in terms of vacancies. To that end, the latest CommercialCafe industrial report<\/a> predicts that 2025 will be a transitional year for the market as it becomes more tenant-favored.<\/p>\n

At the same time, warehousing and logistics \u2014 the primary industrial type delivered during the heyday of 2021 through 2023 \u2014 is taking the back seat as manufacturing space and data centers occupy a growing portion of the pipeline. Accordingly, the report highlights that the amount spent on the development of manufacturing facilities has tripled since 2021, although shifts in policy may slow or halt the acceleration of manufacturing beyond 2025.<\/p>\n

While we are all closely monitoring potential disruptors, the market\u2019s reasonable absorption of space from the COVID-fueled distribution boom has set the stage for the future of development needs with an emphasis on manufacturing and data centers.<\/em><\/p>\n

\u2013 Peter Kolaczynski, Director, Yardi Research Data<\/strong><\/p><\/blockquote>\n

The national average vacancy rate of 8% best reflects the shift in the industrial sector, which is a significant increase from the 4% or lower rates that were recorded two years ago. In fact, many of the markets that saw record-low vacancies \u2014 such as California\u2019s Inland Empire and its sub-2% vacancy rate around 2022 \u2014 now also have values close to the national average.<\/p>\n

CommercialCafe outlooks expect vacancies to plateau in the first half of 2025 as remaining speculative developments continue to get absorbed. Vacancies are then likely to start ticking down again, especially in the current low-development environment.<\/p>\n

New Lease Premiums Down in 22 of 30 Markets, Miami Records Highest New Lease Spread<\/h2>\n

National in-place rents averaged $8.30 per square foot at the end of 2024, up 6.6% year-over-year. Additionally, the average spread between in-place rents and leases signed in the last 12 months stood at approximately $2 per square foot at the end of the year, shrinking from a $2.50 spread just six months ago \u2014 another indicator of stabilizing demand and loosening vacancy rates across most markets.<\/p>\n

At the market level, three California locations recorded the highest in-place rents at the end of 2024: the Orange County industrial market<\/a> came first with an average of $16.20 per square foot, followed by Los Angeles<\/a> ($14.95) and the Bay Area ($13.62). At the opposite end of the spectrum, the most affordable industrial space could be found in Memphis, Tenn. ($4 per square foot), St. Louis ($4.70 per square foot) and Cincinnati ($4.90 per square foot).<\/p>\n

Port markets largely recorded the highest rent growth year-over-year, spearheaded by New Jersey, where rents are up 9.8%. Other markets with high rent growth include Miami<\/a> with 9.6% and the Inland Empire, Calif. and Atlanta, both at 8.7%. Meanwhile, the slowest growth was recorded for industrial space in Kansas City, Mo.<\/a>, where average rents increased by just 2% between December 2023 and 2024. Up next were Detroit with 2.3% and St. Louis<\/a> with 2.4%.<\/p>\n

Finally, the highest spread between in-place leases and leases signed in the last 12 months was recorded in Miami with a difference of $4.87 per square foot. Similar markets with high new lease premiums include New Jersey at $4.08, Phoenix<\/a> with $3.98 and Charlotte, N.C., at $3.90.<\/p>\n

For more analysis across all major industrial markets in the U.S., see CommercialCafe’s original report<\/a>.<\/p>\n\n\n\n\n\t\n\t\n\t\n\t\n\t\n\t
Industrial space in Dallas<\/a><\/td>Industrial space in Columbus<\/a><\/td>Industrial space in Nashville<\/a><\/td>\n<\/tr>\n
Industrial space in Phoenix<\/a><\/td>Industrial space in Indianapolis<\/a><\/td>Industrial space in Baltimore<\/a><\/td>\n<\/tr>\n
Industrial space in Chicago<\/a><\/td>Industrial space in Denver<\/a><\/td>Industrial space in Boston<\/a><\/td>\n<\/tr>\n
Industrial space in Houston<\/a><\/td>Industrial space in Seattle<\/a><\/td>Industrial space in Los Angeles<\/a><\/td>\n<\/tr>\n
Industrial space in Philadelphia<\/a><\/td>Industrial space in Atlanta<\/a><\/td>Industrial space in Cleveland<\/a><\/td>\n<\/tr>\n
Industrial space in Charlotte<\/a><\/td>Industrial space in Cincinnati<\/a><\/td>Industrial space in Portland<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n","protected":false},"excerpt":{"rendered":"

New lease premiums for industrial real estate in the U.S. at the end of the year were down 50 cents per square foot compared to just half a year ago, signaling that 2025 may be the year when vacancies finally start ticking down again and markets absorb the record space built during the pandemic years.<\/p>\n","protected":false},"author":71,"featured_media":690,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4],"tags":[],"class_list":["post-4131","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industrial-real-estate-reports"],"acf":[],"yoast_head":"\nNew Lease Premiums for Industrial Indicate Further Normalization<\/title>\n<meta name=\"description\" content=\"Decreasing new lease premiums signal that industrial real estate may be nearing a vacancy equilibrium, a new report argues.\" 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