The supply chain revolution isn’t a distant trend; it’s reshaping real estate right now. With e-commerce continuing its ascendancy, tariffs rattling global freight, and companies moving operations closer to home, commercial warehouse space has become one of the hottest asset classes. But the demand isn’t spread evenly; some U.S. metros are burning brighter as distribution hubs, reshoring centers, and logistics corridors.
For industrial real estate professionals, the key isn’t just to follow vacancy rates or rent growth but to understand the undercurrents, port expansions, major construction pipelines, and infrastructure investments that drive long-term absorption.
In this guide, we spotlight ten top-tier markets where warehouse demand is not only surging now but poised for sustained growth.
TL;DR
- Industrial absorption is accelerating in cities with strong logistics infrastructure and expanding population hubs.
- Cities like Dallas–Fort Worth, Houston, Phoenix, Jacksonville, and Cleveland stand out for their low vacancy rates and high leasing volume.
- Despite national vacancy rising, rents and leasing activity remain resilient in cities with enduring demand fundamentals.
Cities with the Strongest Industrial Warehouse Demand
| City / Metro | 2024–25 Absorption (MSF) | Vacancy Rate | Rent Growth YoY | Key Demand Drivers |
|---|---|---|---|---|
| Dallas–Fort Worth, TX | ~24 MSF | 9–10% | Steady | Central logistics hub, high-volume leasing |
| Houston, TX | ~13 MSF | ~7% | Moderate | Port access, manufacturing, 3PLs |
| Phoenix, AZ | ~11–12 MSF | ~12–13% | High (~9%) | E‑commerce logistics, semiconductor builds |
| Cleveland, OH | Low (top vacancy in 2.6%) | ~2.6% | Lower ($4/sf) | Affordable, established industrial fundamentals |
| Jacksonville, FL | Robust (6.1% vacancy) | ~6% | Mid ($13/sf) | Port expansion, population and logistics growth |
| Nashville, TN | High rent growth (~8.7%) | Below avg | Rising (~8%) | Onshoring, regional distribution hub |
| Richmond, VA | ~1.9 MSF Q3 2024 | ~3.4% | Moderate | Mid-Atlantic location, growing infrastructure |
| Las Vegas, NV | ~2.8 MSF Q1 2024 | ~4.9% | Moderate | Logistics spillover, speculative warehouse builds |
| Miami, FL | High rent growth (~11%) | Mixed | High | Trade gateway, last‑mile delivery demand |
| Atlanta, GA | Negative absorption recently | ~8.7% | Moderate | Transit hub challenges, temporary oversupply |
1. Dallas–Fort Worth, TX
DFW remains at the heart of U.S. industrial real estate—not only for its massive 24.2 MSF net absorption in 2024, but for its resilience through rising vacancy (9.2%) and construction cycles.
Powered by its intermodal rail facilities, proximity to the Great Southwest Industrial District, and ongoing build-to-suit activity, DFW attracts both legacy logistics firms and high-growth tenants. It's a vacancy plateau, steady rent ($9.39/sf), and the scale of leasing indicates a market that’s stabilizing, not peaking.
Key Highlights:
- 24.2 MSF in absorption in 2024 – highest in the nation
- Vacancy stabilizing around 9.2%
- Competitive rents (~$9.39/sf) for large-scale logistics
- Key intermodal and distribution hub in the central U.S.
- Major tenant consolidation and build-to-suit activity
Also Read: 10 Key Insights for the Commercial Real Estate Market Outlook 2025
2. Houston, TX
Houston continues to impress with just 7% vacancy and ~13 MSF absorption. Its major port, global energy ties, and integration of 3PL services make it a cost-effective alternative for tenant relocations. Notably, Brookfield’s recent $428 million acquisition—96% occupied—signals investor confidence in legacy industrial real estate.
Key Highlights:
- 13 MSF absorption and 7% vacancy
- Strong port infrastructure with global trade routes
- Ideal for energy and industrial tenants
- Major institutional investments in 2025
- Growth in 3PL and domestic freight demand
3. Phoenix, AZ
Phoenix’s industrial sector has absorbed 11–12 MSF recently, even with vacancy around 12–13%. Rent growth clocks in around 9%, among the highest in major U.S. metros. Anchored by semiconductor plants, e-commerce facilities, and large-format mills, Phoenix’s combination of available land plus robust demand makes it a continued hotspot.
Key Highlights:
- 11–12 MSF absorption in 2024
- Vacancy ~12–13%, but offset by demand pipeline
- 9% rent growth YoY – among the highest in the U.S.
- New manufacturing (semiconductors, EVs) is fueling demand
- Strategic location for West Coast distribution
Also Read: 8 Key Insights on Small Bay Industrial Real Estate Trends
4. Cleveland, OH
Cleveland leads the nation in industrial tightness, with vacancy as low as 2.6–3.3%, and only 600k SF new absorption in Q1, yet deep unmet demand. Modest new supply (≈0.8 MSF supplied all year) stands against low-cost rents ($4–6/sf in Class A), and the region’s infrastructure, rail, highway, and inland port, continues to attract logistics investment on both the industrial user and capital side.
Key Highlights:
- Vacancy rate ~2.8%—lowest of all major U.S. markets
- $4–6/sf rents make it a cost-effective option
- Limited new supply (~0.8 MSF in 2024)
- Strong rail/highway connectivity in the Midwest corridor
- High occupancy rates (up to 98% in key submarkets)
5. Jacksonville, FL
Jacksonville has grown steadily, tied to its port expansion and regional population trend. Despite a 6.1% vacancy rate, asking rents (~$13/sf) remain well-supported. Forecasts suggest port capacity doubling by mid‑2025, and new leasing pipelines have held strong even in regional slowdowns.
Key Highlights:
- 6.1% industrial vacancy
- Average asking rent ~$13/sf
- Port expansion to double capacity by 2025
- Strong regional in-migration is boosting last-mile logistics
- Strategic location between Miami, Atlanta, and Charleston
6. Nashville, TN
While not always in top-10 lists, Nashville has seen 8–9% annual rent growth, supported by warehouse-mediated reshoring and mid-South logistics buildout. Vacancy remains low, and corporate investment, like Brookfield’s multi-asset industrial purchases, signifies growing institutional appetite.
Key Highlights:
- Rent growth at ~9% YoY
- Proximity to I-40 and I-65 for national distribution
- Low vacancy with growing tenant activity
- Emerging reshoring hub for light manufacturing
- Rising institutional investments in logistics parks
7. Richmond, VA
Richmond hit nearly 1.9 MSF leased in Q3 2024, driving vacancy down to 3.4%. Located in the industrial radius linking Baltimore, DC, and the Southeast, it draws tenant interest for cost-efficient fulfillment locations.
Key Highlights:
- 1.9 MSF absorption in Q3 2024
- Vacancy as low as 3.4%
- Ideal last-mile and regional fulfillment center
- Proximity to I-95 and East Coast ports
- Growing demand from e-commerce and 3PLs
8. Las Vegas, NV
Las Vegas recorded 2.8 MSF leased in Q1 2024, with vacancy near 4.9%. It functions as a spillover logistics hub for West Coast goods, buoyed by cluster warehouse parks, railroad connections, and geographic advantage for Western distribution.
Key Highlights:
- 2.8 MSF of warehouse leases in Q1 alone
- Vacancy rate ~4.9%
- Overflow market for Southern California logistics
- Strong linkage to the 1-15 corridor
- Significant speculative development activity
9. Miami, FL
Miami features some of the strongest rent gains nationwide, 9.8% YoY growth, despite vacancy at ~11.7%. As a trade gateway to Latin America, and with increasing demand for last-mile distribution, the metro remains dynamically priced.
Key Highlights:
- Nearly 10% rent growth year-over-year
- High vacancy (~11.7%) yet robust leasing velocity
- Strong port and air freight infrastructure
- Core hub for Latin America-bound freight
- Demand fueled by logistics and cold storage sectors
10. Atlanta, GA
Atlanta’s vacancy rose recently alongside negative absorption (~–2.2 MSF). However, its strategic road and air freight corridors underpin a market widely seen as poised for recovery once speculative deliveries subside and trade dynamics stabilize.
Key Highlights:
- Temporary negative absorption in early 2025
- Vacancy ~8–9% but flattening
- Key Southeast logistics hub with Hartsfield-Jackson airport access
- Heavy speculative development is catching up with demand
- Expected rebound in late 2025 and beyond
Also Read: How to Master Commercial Real Estate Research
Conclusion
Warehouse economics in 2025 is not about simple vacancy or rents; it’s about long-term traction in strategically enabled markets. Cities that boast strong infrastructure, port access, and supply chain relevance are maintaining absorption and rent resilience even amid broader oversupply trends. Despite higher vacancy rates in some markets, their long-term logistics fundamentals make them ideal for industrial investment.
FAQs
What causes a spike in warehouse demand in a given city?
Demand tends to rise where supply chains are reshoring, port infrastructure is expanding, or e‑commerce growth is concentrated. Regions with intermodal access, strong highway systems, and a nearby population base often pull ahead.
Should I worry if a top city’s vacancy rate is rising?
Not always. Rapid construction can temporarily push vacancy rates higher even if demand is strong. The key is to evaluate net absorption, rent momentum, and tenant quality, not just vacancy alone.
Are inland cities like Cleveland and Nashville better than coastal?
They offer a strategic advantage in price and vacancy. Inland hubs benefit from affordability, lower competition, and strong transport links. Coastal markets, while pricier, may offer scarcity-driven value if supply is tightly controlled.
Where should investors look for the next “warehouse boom”?
Keep an eye on emerging Sun Belt metros with port expansion and industrial pipelines, such as Jacksonville, Richmond, and Nashville. Also monitor population inflow regions with strong logistics activity but still underbuilt pipelines.
