Top 10 U.S. Cities for Industrial Investment in 2025

Introduction

Industrial real estate performance in 2025 is a tale of divergent market dynamics. According to CoStar’s Industrial National Report (July 2, 2025), the sector has seen vacancy climb to a decade high of 7.4% nationally amid a wave of new supply, with annual rent growth slowing to 1.7%. Against this backdrop, institutional investors and developers are seeking markets with the best near-term fundamentals or compelling risk-reward profiles. This report ranks the Top 10 U.S. cities for industrial investment in 2025, emphasizing key metrics: vacancy rates, 12-month net absorption (as a percent of inventory), construction pipeline (in square feet and as a % of inventory), asking rent growth (annual and recent quarterly), and leasing activity. The analysis is data-driven, drawing on CoStar’s national market data, and balances current stability with future growth potential.

Evaluating Industrial Market Metrics

Industrial feasibility studies incorporate several critical metrics to gauge a location’s attractiveness. Vacancy rate indicates market tightness – low vacancies signal strong occupier demand (supporting rent growth), whereas high vacancies may reflect oversupply or soft demand. Net absorption (space newly occupied minus vacated) as a percentage of inventory reveals demand momentum relative to market size; a high absorption rate suggests robust tenant uptake. The construction pipeline (ongoing development) is a double-edged sword: a large pipeline relative to inventory can herald future growth or oversupply risk, often measured via the construction-to-inventory ratio. Asking rent growth, both 12-month trailing and recent quarter annualized, shows the trajectory of rents – accelerating rent growth can improve investor returns, while a negative turn may foreshadow cooling conditions. Finally, leasing activity provides a forward-looking pulse of demand beyond net absorption. Markets where new leasing volume is surging (even if vacancies are currently elevated) may offer attractive entry points before fundamentals tighten. Industrial feasibility assessments weigh all these factors – a balanced market with low vacancy, strong absorption, sustainable new supply, and rent growth is ideal, but markets with one or two weak spots can still be compelling if prospects for improvement exist (i.e. a favorable risk-reward tradeoff).

Methodology: Using CoStar’s Q2 2025 data, we holistically ranked metros by combining the above metrics. Priority is given to near-term performance (e.g. 2025 outlook), but we also note longer-term positioning. Below, each of the top 10 markets is described with its key stats and outlook. A summary comparison table is provided for quick reference.

Top 10 Industrial Investment Markets in 2025 (Summary Table)

Rank	Metro Area	Vacancy Rate	Net Absorption (% of Inventory)	Under Construction (% of Inventory)	Rent Growth (YoY)	Recent Quarterly Rent Trend
1.	Dallas–Fort Worth	9.1%	24.5 MSF (2.0%)	34.2 MSF (2.8%)	+3.2%	–4.8% (Q1 ‘25 annualized)
2.	Houston	7.0%	13.7 MSF (1.6%)	19.2 MSF (2.3%)	+1.7%	–12.1% (Q1 annualized)
3.	Columbus	8.4%	4.0 MSF (1.0%)	4.4 MSF (1.1%)	+5.3%	–16.6% (Q1 annualized)
4.	Charlotte	10.0%	1.6 MSF (0.4%)	7.3 MSF (1.8%)	+5.5%	–28.4% (Q1 annualized)
5.	Phoenix	12.6%	12.0 MSF (2.4%)	20.6 MSF (4.1%)	+2.3%	–6.1% (Q1 annualized)
6.	Inland Empire	8.4%	1.0 MSF (0.1%)	11.9 MSF (1.5%)	–4.0%	+48.0% (Q1 annualized)
7.	Atlanta	8.7%	–1.8 MSF (–0.2%) (net loss)	15.3 MSF (1.8%)	+4.0%	–14.2% (Q1 annualized)
8.	Kansas City	5.6%	9.0 MSF (2.4%)	9.8 MSF (2.6%)	+1.7%	+14.5% (Q1 annualized)
9.	Saint Louis	4.2%	3.8 MSF (1.1%)	4.1 MSF (1.2%)	+3.8%	–36.7% (Q1 annualized)
10.	Nashville	6.0%	1.37 MSF (0.5%)	9.3 MSF (3.2%)	+6.3% (Rank #2)	–42.6% (Q1 annualized)

(Source: MMCG Database. Rent growth is asking rent change; “Q1 annualized” indicates the Q1 2025 change projected over a full year.)

1. Dallas–Fort Worth (DFW) – High Demand, Manageable Oversupply

DFW tops the list for its sheer scale and strong demand, despite elevated vacancy. Vacancy in Dallas has risen to 9.1% as a record 110+ million sq. ft. sits vacant. This higher vacancy earns DFW a weaker vacancy ranking (#85 out of 100 markets) reflecting recent supply deliveries. However, the market absorbed a nation-leading 24.5 million sq. ft. over the past 12 months – equivalent to 2.0% of its massive inventory – indicating tenants are actively backfilling space. In fact, DFW’s annual net absorption is the highest of any U.S. metro. Construction remains robust with 34.2 million sq. ft. underway (about 2.8% of inventory), the largest pipeline in the country in absolute terms. This new development has outpaced near-term absorption, softening landlord leverage: market rents grew 3.2% year-on-year (above the U.S. average) but dipped by about –4.8% in Q1 2025 (annualized) as concessions ticked up.

Outlook: DFW’s fundamentals remain attractive for investment. The higher vacancy provides breathing room for tenants, but the metro’s central location and population growth continue to drive leasing. Industrial rents are among mid-tier levels (approx. $10.46/SF), and even after a slight quarterly pullback, rent growth is positive year-over-year. Given DFW’s unparalleled absorptive capacity and diversified demand base (retail distribution, manufacturing, e-commerce), investors see a favorable risk-reward: vacancy is above equilibrium now, but leasing activity should fill new warehouses over the next several quarters. DFW offers scale and liquidity, making it a top choice for institutional portfolios.

2. Houston – Balanced Growth in a Major Logistics Hub

Houston’s industrial market combines strong recent demand with relatively tight vacancy for a large metro. Vacancy is 7.0%, below the national average, giving Houston one of the lower vacancy rankings among big markets (64th percentile) – a notable achievement given its size. Net absorption over the past year totaled 13.7 million SF (1.6% of inventory), second-highest among major markets, reflecting continued expansion in port and petrochemical-related logistics. Developers have been active, with 19.2 million SF under construction (2.3% of stock), yet the construction-to-inventory ratio is moderate compared to faster-growing Sunbelt peers. Rents tell a story of moderation: asking rents grew a modest +1.7% year-on-year and even declined about –12% annualized in Q1, as new supply offered competitive rates. Despite that quarterly dip, Houston’s rent level ($9.33/SF) is affordable (ranked mid-pack at #51), which helps attract tenants.

Outlook: Houston offers solid, if unspectacular, near-term performance with low risk. Its vacancy is stable and well below oversupplied markets like Phoenix or Atlanta. While rent growth has cooled recently, the absence of a rent spike also indicates Houston avoided the worst excesses of the pandemic-era boom, so a severe correction is less likely. The market’s absorption has kept pace with deliveries, resulting in a low construction ratio (roughly 0.7, indicating new supply is only ~70% of last year’s absorption). Houston’s port infrastructure (ranking first in U.S. waterborne tonnage) and huge consumer base make it a long-term strategic hold. Investors can expect steady cash flows and gradual rent appreciation – Houston may not be the fastest-growing, but its balanced fundamentals (healthy vacancy, steady absorption) justify its high ranking.

3. Columbus – Tight Capacity and Rapid Growth

Columbus has emerged as a standout midwest market with very tight supply-demand fundamentals and significant growth prospects. The vacancy rate is a low 8.4% (in line with the U.S. average, despite a surge of new development), and the market absorbed ~4.0 million SF over the past 12 months, about 1.0% of inventory. While that absorption in absolute terms isn’t top-5, relative to Columbus’s inventory it ranks among the highest (Columbus is #7 for absorption rate). The construction pipeline is active but not overdone: 4.4 million SF is underway (1.1% of inventory), a pipeline smaller (proportionally) than many Sunbelt markets. Perhaps most impressively, Columbus has enjoyed rent growth of +5.3% year-over-year – one of the fastest in the nation (ranked 7th) – thanks to its big bump in leasing and still-limited modern logistics stock. Rents pulled back by –16% annualized in the first quarter, a sign that new deliveries have slightly outpaced move-ins; however, this comes after multiple quarters of outsized growth, and rent levels (around $8.28/SF) remain very competitive.

Notably, leasing velocity in Columbus has been exceptional: CoStar reports new leasing volumes in early 2025 were over 50% above the prior two-year average, boosted by major commitments in manufacturing and e-commerce. The market has gained national attention with projects like Intel’s planned semiconductor plants and large distribution centers, which are expected to keep demand robust.

Outlook: Columbus offers a compelling growth story with balanced fundamentals. Its low vacancy and high rent growth signal a landlord-favorable market, yet the expansion of its industrial base (nearly 387 million SF inventory) provides room for new entrants. The risk of oversupply appears contained – the construction ratio is roughly 1.5, meaning the under-construction space is only 1.5 times the past year’s absorption. With strong leasing momentum (one of the hottest Midwest markets by that measure) and strategic location at the crossroads of major highways, Columbus is expected to continue outperforming. Investors looking for a high-growth, medium-sized market with sustainable demand drivers find Columbus very attractive in 2025.

4. Charlotte – Booming Development with Post-Pandemic Growing Pains

Charlotte has been a Sunbelt star, though recent data show the market cooling from red-hot to merely warm. Vacancy climbed to 10.0% as of Q2, a sharp increase from sub-5% levels a year prior, due largely to an influx of new speculative deliveries. Indeed, Charlotte added over 11.3 MSF of new supply in the past year, one of the highest delivery totals (2.9% of inventory). Net absorption was positive – about 1.59 MSF (0.4% of stock) over 12 months – but demand lagged far behind supply, pushing Charlotte’s vacancy rank to a weak 93rd (among the highest vacancies nationally). Yet the long-term demand drivers remain intact: the region attracted diverse tenants (manufacturing, logistics, automotive), and new leasing activity has been robust, surging over 50% above recent averages in early 2025 as firms secure space ahead of future growth. Charlotte’s asking rents grew +5.5% year-over-year (top-10 nationally), although they plunged –28% annualized in Q1 as landlords competed to fill new buildings. Current industrial rent is around $9.78/SF, roughly average among U.S. markets. The development pipeline remains significant at 7.3 MSF under construction (≈1.8% of inventory), but it has tapered from its peak, suggesting the vacancy expansion may level off.

Outlook: Charlotte is a case of short-term indigestion amid a strong long-term diet. The near-term investor experience may involve higher carrying costs (rent concessions and downtime) as the market absorbs the supply shock of 2024-25. However, Charlotte’s economy and population are booming, feeding future industrial demand. The metro sits at a key logistics crossroads of the Southeast and has seen one of the fastest post-pandemic rent ascents (despite the recent correction). For investors willing to weather some volatility, Charlotte offers upside potential: vacancies are likely to tighten once the current wave of buildings leases up. Already, the market’s leasing fundamentals are improving – tenant activity is elevated – and by late 2025 we expect Charlotte to stabilize. In sum, Charlotte remains a top industrial investment market for those looking beyond the immediate supply glut, combining high growth prospects with a now more attainable entry price point (due to the recent rent dip).

5. Phoenix – High Risk, High Reward in the Desert

Phoenix stands out as a high-growth market grappling with oversupply. It currently has one of the highest vacancy rates in the nation at 12.6%, ranking in the bottom 10 (94th). This vacancy spike follows an extraordinary construction boom: Phoenix delivered 25.7 MSF in the last 12 months (a 5.1% inventory expansion, the fastest in the U.S.) and still has 20.6 MSF underway (another 4.1%). The good news: demand has been enormous as well. Net absorption over the past year hit 12.0 MSF, an annual take-up of 2.4% of inventory – placing Phoenix #3 among major markets for absorption pace. Large e-commerce and 3PL (third-party logistics) firms continue to backfill space, and asking rents managed a +2.3% YoY increase despite the supply pressures. Rent growth has recently stalled (–6.1% annualized in Q1), as landlords offer discounts to compete for tenants in newly built warehouses. Even so, Phoenix’s current rent (~$13.66/SF) is relatively high for an inland market (reflecting the new Class A product).

Outlook: Phoenix epitomizes the risk-reward calculus. On one hand, vacancy at 12%+ is a red flag – tenants have abundant options, and it may take several quarters (or more) for absorption to catch up, which could suppress rent growth in the interim. On the other hand, Phoenix’s long-term demand story is compelling: it’s a fast-growing population center and a favorite for West Coast distributors seeking lower costs. The CoStar report notes that while Phoenix’s availability is elevated now, its leasing volume remains high, and the market’s size (500+ million SF) can eventually digest the new supply. Investors with a higher risk tolerance may find Phoenix attractive to buy into during the soft patch, before fundamentals tighten. The market’s construction pipeline is finally easing (developers have pulled back new starts), so 2025 should mark peak vacancy. As vacancy declines in subsequent years and rents re-accelerate, Phoenix assets bought in 2025 could deliver outsized returns, making it a classic “buy low” opportunity – hence its inclusion among the top 10 despite current headwinds.

6. Inland Empire (California) – A Critical Logistics Hub in Transition

Southern California’s Inland Empire (Riverside/San Bernardino) has long been the premier big-box distribution market, and although 2025 finds it at an inflection point, its strategic importance lands it on this list. The Inland Empire’s vacancy is now 8.4%, a stark rise from the sub-3% levels of 2021. A construction wave and slowing port volumes contributed to this higher vacancy (ranked 76th). Net absorption in the past 12 months was only 1.0 MSF (virtually flat at 0.1% of inventory) – a dramatic deceleration for a market that absorbed over 20 MSF annually in recent years. Yet, green shoots are appearing: leasing activity has improved in early 2025 as importers adjust supply chains, and Q1 data show a whopping +48% annualized rent jump after rents actually declined last year (rents were down –4.0% YoY as of Q1). This volatility in rent trends (from –4% to +48% in a quarter) suggests the worst may be over – landlords are regaining pricing power as availabilities get leased, though that quarterly figure is likely an outlier. Current asking rents in the Inland Empire average about $12.94/SF, with enormous variation depending on building size and features. The development pipeline is still significant (11.9 MSF underway, ~1.5% of inventory), but notably smaller than last year’s (the market is past peak construction).

Outlook: The Inland Empire remains a top-tier logistics location – its proximity to the Ports of LA/Long Beach and vast consumer base is irreplaceable. The near-term has challenges: elevated vacancy and a lot of new space to fill. However, most observers (and CoStar’s forecast) expect vacancy to peak under 9% before improving in 2026 as construction slows and the economy absorbs the space. For investors, 2025 may be an optimal entry point: cap rates have softened due to the uptick in vacancy, but demand drivers are intact (evidenced by recent leasing momentum in this market). Once the Industrial “cornerstone” market of the U.S., the Inland Empire is recalibrating to a sustainable equilibrium. It offers an attractive risk-reward profile – short-term risk from the supply overhang, but unrivaled long-term rewards as a gateway distribution hub. In sum, the Inland Empire’s fundamentals are in transition, but its inclusion in the top 10 is warranted by its central role and expected recovery trajectory.

7. Atlanta – Southeast Super-Region Adjusting After a Supply Surge

Atlanta, one of the nation’s largest industrial markets, finds itself digesting a wave of new construction, which has caused a near-term softening in fundamentals. Vacancy has risen to 8.7% (rank #80), roughly double its rate two years ago. Over the last 12 months, Atlanta actually saw a slight net occupancy loss – –1.77 MSF net absorption (–0.2% of inventory) – reflecting move-outs and new vacancies outpacing move-ins. This negative absorption (ranked 90th) is a rare setback for a market that led the country in absorption not long ago. The culprit is largely supply: Atlanta delivered over 16 MSF in the past year, and vacancy spiked especially in big-box logistics properties. Despite this, tenant demand remains very strong in Atlanta; CoStar noted that new leasing volume jumped over 50% above recent norms in Q1 (tariff-related inventory shifts may have pulled some activity forward). Asking rents grew +4.0% YoY – outpacing national rent inflation – but did decline about –14% annualized in Q1 amid the vacancy pressure. Atlanta’s average industrial rent (~$9.88/SF) sits around the national median, remaining a cost-effective choice for distributors. On the supply side, 15.3 MSF is currently under construction (1.8% of stock), suggesting that 2025 will see continued deliveries but likely less than in 2023–24.

Outlook: Atlanta’s inclusion in the top 10 is a bet on its resilience and importance. Short-term, the market is soft – landlords are offering more concessions, and it may take a few more quarters to work through the vacant new space. However, Atlanta’s fundamentals for industrial demand are among the strongest in the country: it’s a regional distribution nexus with interstate highway convergence, a huge and growing population, and a booming manufacturing/logistics employment base. These drivers should reassert themselves by late 2025, fueling absorption and bringing vacancy down from its high. Investors can view Atlanta as a slightly contrarian play right now – it’s a premier market going through a supply-driven downcycle. As the market recovers, rents are expected to climb again (though maybe not at the 8–10% annual pace seen during the pandemic). In a nutshell, Atlanta offers scale and long-term growth, and its current weakness presents an opportunity to gain a foothold in the Southeast’s primary hub at more favorable pricing, landing it solidly at #7.

8. Kansas City – Steady Performer with Upside

Kansas City may come as a surprise entry, but its recent performance justifies the spotlight. Vacancy stands at 5.6%, well below the national average, reflecting a tight market (ranked in the upper third of markets for low vacancy). Over the past year, KC absorbed an impressive 8.98 million SF – 2.4% of its inventory – which is the 4th-highest absorption rate among major markets. This strong demand has come from retail distributors (KC is a central hub for national logistics), food processors, and manufacturing users capitalizing on the region’s low costs. Kansas City has also seen a lot of building, with ~11.0 MSF delivered in the last 12 months and 9.8 MSF now under construction (about 2.6% of stock). Crucially, absorption has nearly kept pace with new supply, so vacancy has remained stable in the mid-5% range. Rent growth in KC has been modest at +1.7% YoY, but notably, rents jumped +14.5% annualized in Q1 2025 – a sign that landlords are now gaining pricing leverage as available space gets snapped up. At roughly $7.30/SF, Kansas City’s asking rents are among the lowest of any top-50 market (rank #72 in rent level), giving it plenty of room for rent growth without pricing out tenants.

Outlook: Kansas City offers a compelling balance of low current risk and solid growth potential. Its central U.S. location (at the crossroads of I-70 and I-35 and a major intermodal rail center) makes it a natural distribution point, a factor that’s driving its high absorption. The market’s low vacancy and recent rent pops suggest that it is swinging toward a landlord’s market even as new buildings open. Development is still active, but KC’s construction ratio (~0.9) indicates the pipeline is slightly less than one year’s demand – a comfortable level. This market often flies under the radar compared to the big coastal or Sunbelt hubs, but institutional investors are increasingly looking at secondary markets like Kansas City for better yields and stability. With its healthy fundamentals and improving rent trends, Kansas City delivers on both counts. We rank it #8, recognizing it as an “up-and-comer” that has already proven its ability to grow without tipping into oversupply.

9. Saint Louis – Under-the-Radar Stability and Recent Momentum

St. Louis might not typically make headlines, but it has quietly become one of the most balanced industrial markets in 2025. Its vacancy rate is a low 4.2% – among the lowest in the nation (ranked #25). This tightness is a result of consistent demand and restrained construction. In the past year, St. Louis recorded 3.8 MSF of net absorption (1.1% of inventory), a solid pace that has kept vacancy in check. The construction pipeline is very modest: only 4.1 MSF underway (1.2% of stock), and new supply in the last year was under 0.8% of inventory. Essentially, supply and demand are in near equilibrium in St. Louis, creating a very stable environment. Rents grew +3.8% YoY – healthy, though not extreme – and did see a significant one-quarter drop (–36.7% annualized). That quarterly figure likely reflects a temporary pause or mix shift in leasing (given the low vacancy, landlords may have negotiated a few big renewals downward or offered short-term deals). Even so, rent levels in St. Louis ($7.34/SF) remain low (rank #71), which helps attract cost-conscious tenants from pricier metros. CoStar’s report highlighted surging leasing activity in St. Louis: in early 2025, new lease volumes were over 50% higher than the prior two-year average, indicating pent-up demand despite the market’s smaller size.

Outlook: St. Louis offers an attractive risk profile: high occupancy, steady growth, and limited new competition. The market is something of a hidden gem for investors seeking dependable performance. With vacancy at just 4%, tenants often have few choices, supporting future rent increases once current leases roll. The metro’s central location and robust manufacturing base (autos, aerospace, agri-business) underpin its industrial demand. While rent growth has been modest, the surge in recent leasing suggests potential for an uptick as those deals translate to occupancy. As a relatively liquid secondary market, St. Louis might not deliver the explosive growth of a Phoenix or Nashville, but it also avoids the busts – its fundamentals are arguably the most “recession-proof” among our top 10. The inclusion of St. Louis at #9 recognizes that, in a year where many markets are shaking off excesses, a steady market with balanced fundamentals can be exceedingly attractive.

10. Nashville – Boomtown Potential Tempered by New Supply

Rounding out the top 10 is Nashville, a fast-growing market with strong demand drivers but one that is currently working through a glut of new construction. Nashville’s vacancy is 6.0%, roughly on par with pre-pandemic levels and ranked 50th (middle of the pack). Over the past year, net absorption was a respectable 1.37 MSF (0.5% of inventory), but this figure belies the tremendous churn underneath: Nashville simultaneously added over 4 MSF of new supply and backfilled space almost as quickly. The pipeline remains large at 9.3 MSF under construction (3.2% of inventory), one of the highest construction ratios in the country (rank #11 by that metric). This wave of development has started to outpace demand in the short run – asking rents grew +6.3% YoY (the 2nd-fastest growth nationally, showcasing strong tenant appetite), but then plunged –42.6% annualized in Q1 2025 as new space competed for tenants. Such volatility indicates a market in flux. Nashville’s average rent ($12.02/SF) is relatively high for its region (rank #33), likely because much of its inventory is newer, high-quality product. On the demand side, Nashville benefits from diversifying logistics (e.g. music and entertainment industry warehousing, auto parts, appliance distribution) and a booming population that has attracted retailers’ distribution centers. It was also highlighted among markets with surging leasing volumes in early 2025 (50%+ above recent averages), which bodes well for future absorption.

Outlook: Nashville is a high-growth market experiencing growing pains. The near-term risk is that supply growth (3%+ per year) continues to suppress rents and boost concessions until enough tenants absorb the new space. However, if leasing activity is any indicator, Nashville’s demand pipeline is strong – many companies expanding in the Southeast see Nashville as a prime location. We expect Nashville’s vacancy to wobble in the mid-to-high single digits over the next 1–2 years, then improve as construction tapers and the local economy (one of the fastest growing in the U.S.) generates more industrial requirements. For investors, Nashville offers exposure to that robust growth, albeit with some short-term volatility. The market’s long-term trajectory (both in rent and value appreciation) is very favorable given its demographic trends and business in-migration. Thus, despite recent rent swings and hefty supply, Nashville secures the #10 spot as a market where the future payoff could be substantial once the current batch of new warehouses is absorbed.

Industrial Feasibility: Metrics in Action

The above rankings illustrate how a holistic analysis of metrics informs investment decisions. In practice, an industrial feasibility study doesn’t focus on one statistic in isolation – it integrates vacancy, absorption, construction, rent trends, and leasing to create a composite picture of market health. For example, a city like Phoenix (high vacancy, high absorption) might pass a feasibility screen if future absorption is expected to erode that vacancy (making development viable), whereas a city with high vacancy and low absorption would not. Similarly, markets with strong absorption and low vacancy (e.g. Columbus or St. Louis) often support new development or acquisition because they signal unmet demand and potential for rent growth. A high construction ratio can either be a warning sign (risk of oversupply) or, if coupled with high pre-leasing as seen in some top markets, a sign of developer confidence in demand. Rent growth metrics feed directly into financial modeling – steady growth improves yield projections, while negative trends might require more conservative underwriting or indicate a market past its peak. Finally, leasing activity (as highlighted in the CoStar report) is a forward-looking indicator; sharp increases in new leasing volume (as seen in markets like St. Louis, Columbus, and Charlotte) often presage improved occupancy and rent in subsequent quarters. Industrial feasibility studies weigh all these factors to assess location attractiveness: markets with balanced fundamentals or a clear path to equilibrium (even if currently imbalanced) tend to rise to the top, exactly as reflected in the above rankings.

Conclusion

Investors and developers in 2025 face a more nuanced landscape than in the frenetic expansion of a couple years ago. The top 10 markets identified – from mega-hubs like Dallas and Houston to emerging centers like Columbus and Kansas City – each offer a different mix of opportunities and risks. What they share are compelling near-term stories, whether it’s Dallas’s unmatched tenant demand, Columbus’s tight vacancy and growth, or Phoenix’s eventual rebound potential. Crucially, these rankings emphasize that industrial real estate is inherently local. Even amid national trends of rising vacancy and moderating rents, certain markets distinguish themselves through unique demand drivers or disciplined supply. By evaluating key metrics holistically, we’ve identified markets that either demonstrate excellent current performance or have the ingredients for future outperformance (and in many cases, both). As always, investors should align market selection with their strategy – some may prioritize the stability of low-vacancy markets, while others may chase the high-reward turnaround plays. The 2025 data from CoStar suggest that the industrial sector’s center of gravity is shifting somewhat: opportunities are no longer confined to coastal gateways, and many interior and Sunbelt markets have come into their own. What remains constant is that success in industrial investment will rely on rigorous analysis of market fundamentals – precisely the approach taken in this report to spotlight the top cities poised to deliver value in the year ahead.

Sources

Sources reinforcing the article’s findings:

• CBRE – U.S. Real Estate Market Outlook 2025: Industrial & Logistics (CBRE Research, Dec 2024): Highlights that core distribution hubs – such as the Inland Empire, Dallas–Fort Worth, Atlanta, Chicago, and the Northern NJ/Pennsylvania region – “will remain leaders in leasing activity” into 2025cbre, underscoring their strength and justifying their inclusion among the top industrial investment markets.

• JLL – U.S. Industrial Market Statistics, Q4 2024 (Jones Lang LaSalle, Jan 2025): Provides data showing major markets dominated 2024 industrial demand. Six big “mega-market” metros (Inland Empire, Chicago, Northern NJ, Dallas–Fort Worth, Houston, and Atlanta) accounted for about 46.5% of all U.S. industrial leasing volume in 2024jll. Furthermore, over one-third of the nation’s net absorption in 2024 came from Texas markets (Dallas–Ft. Worth, Houston, and Austin), reinforcing the outsized momentum and tenant demand in those metros (many of which rank in the article’s top 10).

• Colliers – U.S. Industrial Market Outlook, Q4 2024 (Colliers Research, Jan 2025): Reports that supply and demand were nearing equilibrium by late 2024. Net absorption for 2024 fell 27% (to ~168 million sq. ft.) and the U.S. vacancy rate rose to ~6.8% ocpartnership as a wave of new construction slightly outpaced demand. Colliers projects vacancy peaking around 7% in 2025 before improving, and notes some top markets already stabilizing – “markets like Chicago…have already achieved equilibrium…with vacancy rates beginning to decline again”, positioning those leading metros to “lead the way into the next real estate cycle”ocpartnership. This reinforces the article’s credibility by showing third-party confirmation that key markets (e.g. Chicago) are turning the corner with healthy fundamentals.

• NAIOP – Industrial Space Demand Forecast, First Quarter 2025 (NAIOP Research Foundation, Mar 2025): Presents a national forecast that triangulates the article’s metrics. The NAIOP model predicts industrial net absorption will slow to just ~52 million sq. ft. in the first half of 2025, then rebound in the second half for a full-year 2025 absorption of ~156 million sq. ft.naiop. It also documents developers’ pullback: the pipeline under construction shrank to about 493 million sq. ft. (down from over 1 billion sq. ft. at the 2022 peak)naiop. Consequently, vacancy rose from 5.9% to 6.2% by late 2024 (highest since 2015)naiop, and rent growth decelerated to 2.8% in 2024 – all of which confirms a more balanced market. These findings lend authority to the article’s points on vacancy, absorption, and construction trends, indicating that the top-ten metros were selected against a backdrop of cooling yet fundamentally solid national conditions poised for improvement.

• Prologis – 2024 Logistics Rent Index (Prologis Research, Jan 28, 2025): Offers an industry perspective on rent and supply dynamics. It found that U.S./Canada logistics rents fell ~7% in 2024 after a decade of growth, as an “influx of new supply” and tempered demand “pushed vacancy rates up in most markets”prologis. Importantly, Prologis notes that excess supply began to pressure rents in specific high-growth markets (e.g. Phoenix and Dallas) where rapid development led to longer lease-up times and the return of landlord concessionsprologis. Outside of the overbuilt pockets, many regions (especially the Southeast) showed resilience, and **vacancies are expected to decline in 2025 as new completions drop by an estimated 38%prologis. This analysis by the world’s largest industrial REIT validates the article’s identification of top markets (like Dallas–Fort Worth and Phoenix) – acknowledging their strong rent growth and the supply headwinds they faced – while affirming a positive 2025 outlook as those markets absorb new space.

• Oxford Economics – US Metro Outlook 2025 (Oxford Economics, Jan 28, 2025): Provides a macroeconomic underpinning for industrial real estate trends. Oxford’s forecast shows all major metro areas growing in 2025, with especially robust expansions in many Sun Belt and logistics-centric cities. Notably, Texas and Southeastern markets are poised to lead U.S. job growth – “Austin, San Antonio, Riverside (Inland Empire), Dallas, and Charlotte are forecast to lead growth” in employment in 2025oxfordeconomics – fueled by strong demographics, tech and distribution sectors. Such economic strength in these metros (several of which appear in the top 10 list) bolsters the article’s premise that they will see vigorous industrial leasing and investment demand, since job and population growth drive warehouse space needs.

• CommercialEdge (Yardi) – U.S. Industrial Market Report, April 2025 (data via CommercialCafe, Apr 2025): Confirms via hard data that Dallas–Fort Worth and its peers are outperformers. According to CommercialEdge, Dallas–Fort Worth had ~24.1 million sq. ft. of industrial space under construction as of April 2025 – by far the highest in the nation (the next closest market, Phoenix, had only ~15 million sq. ft., ~38% less) dallasexpress. This expansive construction pipeline aligns with DFW’s low vacancy and confidence in future demand. Moreover, DFW is cited as seeing in-place rents jump 8.5% year-over-year (March 2025), versus a 6.8% national average, ranking it fifth in the nation for rent growth. These metrics from an independent source reinforce the article’s ranking criteria (construction and rent growth), with DFW and Phoenix clearly exemplifying the high-growth, high-demand characteristics that underpin the top 10 list.

• U.S. Census Bureau – Quarterly Retail E-Commerce Report, Q4 2024 (Dept. of Commerce, Feb 2025): Retail data supports the article’s emphasis on e-commerce as a demand driver. The Census report showed that nationwide e-commerce sales surged ~8.0% in 2024, far outpacing overall core retail sales growth (~3.4%). This rapid growth in online sales has translated into heightened requirements for warehouse and distribution space. It lends credence to the article’s insights on markets like the Inland Empire, Atlanta, and others in the top 10 – all prime beneficiaries of the e-commerce boom – experiencing strong leasing activity and development as companies expand their logistics footprints to meet consumer demand.

  
  

#	Source (organisation & report)	Publication date	Main insight(s) reinforced	Citation
1	CBRE – U.S. Real Estate Market Outlook 2025: Industrial & Logistics	Dec 2024	Predicts a “return to pre‑pandemic demand drivers” in 2025 and singles out core hubs (Inland Empire, DFW, Houston, Atlanta) for continued leasing strength.	cbre
2	CBRE – Q1 2025 U.S. Industrial & Logistics Figures	Apr 2025	National vacancy at 6.3% (highest since 2014) and resilient leasing; supports the article’s macro framing of a supply‑driven soft patch.	cbre
3	JLL – United States Industrial Market Dynamics, Q4 2024	Jan 2025	Shows “mega‑markets” (Inland Empire, Chicago, New Jersey, DFW, Houston, Atlanta) captured 46.5 % of all 2024 leasing volume.	jll
4	JLL – U.S. Industrial Market Dynamics, Q1 2025	May 2025	Pipeline shrank 30 % Y/Y; vacancy ticked to 7.3 %; net absorption rebounded 43 % Y/Y—evidence that fundamentals are stabilising.	jll
5	Colliers – U.S. Industrial Market Outlook, Q4 2024	Feb 2025	Vacancy rose to ~6.8 % but “is anticipated to peak by mid‑2025,” validating the article’s timing thesis.	coillers
6	NAIOP Research Foundation – Industrial Space Demand Forecast, First‑Quarter 2025	Mar 2025	Forecasts 156 M SF of net absorption for 2025 and a sharp drop‑off in new starts—supports supply‑demand normalisation narrative.	naiop
7	Prologis Research – 2024 Logistics Rent Index (“Market rents reset after years of outperformance”)	28 Jan 2025	Finds U.S. logistics rents fell 7 % in 2024 and predicts vacancies will decline in 2025 as completions fall >35 %.	prologis
8	Oxford Economics – U.S. Metro Outlook 2025	Jan 2025	Projects Sun Belt and Texas metros (Austin, San Antonio, Riverside/IE, Dallas, Charlotte) to lead job growth—corroborates local demand drivers.	oxfordeconomics
9	CommercialEdge (Yardi) – U.S. National Industrial Report, April 2025	Apr 2025	Confirms DFW’s 24 M SF pipeline (largest in U.S.) and 8.5 % Y/Y rent growth; illustrates big‑market supply dynamics.	commercialedge
10	U.S. Census Bureau – Quarterly Retail E‑Commerce Sales, Q4 2024 (News Release)	19 Feb 2025	E‑commerce sales up 9.3 % Y/Y versus 4.5 % for total retail—underpins the article’s point that online sales continue to drive warehouse demand.	2.census

These references come from the leading global brokerages, the principal U.S. industrial‑real‑estate trade association (NAIOP), the world’s largest logistics REIT (Prologis), a top macro‑forecaster (Oxford Economics), the foremost private‑sector CRE data aggregator (CommercialEdge/Yardi), and official government statistics (U.S. Census). Together they triangulate vacancy, absorption, rent trends, construction pipelines, and demand drivers—exactly the metrics used in the article—thereby enhancing its authority.

3 Star Industrial Distribution, Suburban