Still Simmering: Q1 2025 Industrial Review

Amid a mixed economic backdrop, the U.S. industrial sector maintained strong underlying stability through Q1 2025, with steady fundamentals across major markets. In this report, we review key trends across the top 65 U.S. industrial markets, each exceeding $10 billion in asset value (as defined by CoStar¹), including rent growth, vacancy rates, and construction activity.

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Market Rent Growth

Industrial rents continued to grow across the country, led by standout markets in the Midwest and Southeast. Columbus, OH topped the list for year-over-year rent growth at +7.47%, up from +6.68% in the prior quarter, followed closely by Milwaukee, Cincinnati, and Boston, all showing robust annual increases more than double the average. Quarterly leaders included Columbus and Baltimore, with gains over +2.00%, and Orlando, Cleveland, and Charlotte close behind. While the overall average dipped slightly, Q1 2025 still posted +0.45% quarter-over-quarter and +3.38% year-over-year growth, indicative of ongoing market strength.

Quarter-over-Quarter

1. Columbus, OH  +2.08% [+$0.17/SF]
2. Baltimore, MD  +2.03% [+$0.23/SF]
3. Orlando, FL  +1.84% [+$0.26/SF]
4. Cleveland, OH  +1.80% [+$0.12/SF]
5. Charlotte, NC  +1.78% [+$0.17/SF]

                  -     Average  +0.45% [+1.80% Annualized]

Year-over-Year

1. Columbus, OH  +7.47% [+$0.58/SF]
2. Milwaukee, WI  +7.37% [+$0.52/SF]
3. Cincinnati, OH +7.02% [+$0.51/SF]
4. Boston, MA  +6.94% [+$1.09/SF]
5. Jacksonville, FL  +6.81% [+$0.69/SF]

                  -     Average  +3.38%

Inventory Growth

Several markets continued to add meaningful supply, with activity strongest in Savannah and Austin. Savannah recorded the highest year-over-year inventory growth at +19.40%, representing 25.0M SF and 32 new buildings. Austin followed with +8.35% YoY growth and 13.0M SF delivered, marking a notable uptick from its 2024 Q4 pace of +7.26%. Las Vegas, Phoenix, and Charleston also remained highly active on both quarterly and annual bases. Across all top markets, Q1 2025 averaged +0.39% QoQ and +2.15% YoY growth, pointing to measured, yet persistent expansion.

Quarter-over-Quarter

1. Savannah, GA  +2.69% [+4.0M SF, +5 Buildings]
2. Austin, TX  +2.44% [+4.0M SF, +48 Buildings]
3. Charleston, SC +1.53% [+1.7M SF, +6 Buildings]
4. Las Vegas, NV  +1.51% [+2.9M SF, +32 Buildings]
5. Phoenix, AZ  +1.40% [+6.9M SF, +37 Buildings]

                  -     Average  +0.39% [+1.56% Annualized]

Year-over-Year

1. Savannah, GA  +19.40% [+25.0M SF, +32 Buildings]
2. Austin, TX  +8.35% [+13.0M SF, +173 Buildings]
3. Las Vegas, NV  +7.57% [+13.6M SF, +93 Buildings]
4. Phoenix, AZ  +7.50% [+34.8M SF, +172 Buildings]
5. Charleston, SC +6.83% [+7.4M SF, +32 Buildings]

                  -     Average  +2.15%

Vacancy Change

Vacancy improvements in several markets point to strengthening tenant demand. Kansas City posted the strongest year-over-year improvement, after not ranking in the top five previously, with vacancy down -1.15% to 4.6%. Savannah also showed meaningful progress, posting a -1.10% vacancy decline despite its underwhelming vacancy rate of 10.6%, compared to the 6.95% average among top markets. On a national basis, average vacancy rose +1.10% year-over-year, which marks a continued improvement from the +1.49% YoY increase observed last quarter.

Quarter-over-Quarter

1. Kansas City, MO  -0.97% [2025 Q1: 4.6%]
2. Harrisburg, PA  -0.60% [2025 Q1: 6.0%]
3. Dallas-Fort Worth, TX  -0.46% [2025 Q1: 9.1%]
4. Cincinnati, OH  -0.41% [2025 Q1: 5.3%]
5. Minneapolis, MN  -0.33% [2025 Q1: 3.8%]

                  -     Average  +0.19% [+0.77% Annualized]

Year-over-Year

1. Kansas City, MO  -1.15% [2025 Q1: 4.6%]
2. Savannah, GA  -1.10% [2025 Q1: 10.6%]
3. Saint Louis, MO  -0.94% [2025 Q1: 3.8%]
4. Louisville, KY  -0.51%[2025 Q1: 4.8%]
5. Houston, TX  -0.29% [2025 Q1: 6.6%]

                  -     Average  +1.10% [2025 Q1: 6.95%]

Industrial Employment Growth

While national employment gains slowed, several industrial markets continued to post strong job growth. Charleston, Las Vegas, Salt Lake City, and Honolulu all saw year-over-year increases above +4.00%, well above the national average of +0.37%. These markets added thousands of new industrial jobs, supporting regional absorption and long-term demand.

Year-over-Year

1. Charleston, SC  +5.05% [+2.9K Employees]
2. Las Vegas, NV  +4.55% [+5.3K Employees]
3. Salt Lake City, UT  +4.51% [+5.6K Employees]
4. Honolulu, HI  +4.20% [+1.6K Employees]
5. Jacksonville, FL  +3.40% [+3.0K Employees]

                  -     Average  +0.37%

Population Growth

Population growth among the top industrial markets accelerated this quarter, with the year-over-year average rising to +1.04%, up from +0.78% in Q4 2024. Orlando, Raleigh, Austin, and Charlotte all remained in the top five, each posting stronger growth than the prior quarter. Houston also saw a notable gain, moving from 1.54% to 2.11% YoY growth, placing it higher in the rankings and reinforcing its industrial demand profile.

Year-over-Year

1. Orlando, FL  +2.35% [+68K People]
2. Raleigh, NC  +2.25% [+35K People]
3. Austin, TX  +2.16% [+54K People]
4. Houston, TX  +2.11% [+162K People]
5. Charlotte, NC  +2.06% [+58K People]

                  -     Average  +1.04%