In May, industrial construction reached 342.3 million square feet nationwide, the latest Yardi Matrix Industrial Report shows.
Report Highlights
- In-place rents averaged $8.54 per square foot in May, up 6.3 percent year-over-year
- The vacancy rate declined to 8.5 percent, a 30-basis-point drop from April
- 86.9 million square feet of construction starts through May, lowest year-to-date total since 2018
- Projects under construction accounted for 1.7 percent of national inventory, totaling 342.3 million square feet
- Industrial sales volume reached $21.4 billion through May, with assets trading at for an average price of $133 per square foot
Construction activity slows amid cost and policy challenges
Industrial development is decelerating as developers face rising costs and policy uncertainty. Through May, new starts totaled just 86.9 million square feet—marking the slowest five-month period for groundbreakings since 2018. A 50 percent tariff on imported steel and fewer-than-expected interest rate cuts are contributing to the slowdown.
Despite the overall pullback, several markets remain active. Memphis led the nation with 4.2 percent of its inventory under construction, followed by Phoenix (3.9 percent) and Dallas (2.8 percent). These metros continue to attract tenants and capital, even as broader development momentum slows.
Rents rise, investment activity concentrates
Rent growth remains positive across most major markets. Miami led all metros with a 9.8 percent annual increase, while Orange County posted the highest average rent at $16.69 per square foot. The national vacancy rate edged down to 8.5 percent, though it remains elevated compared to mid-2024.
On the investment front, Phoenix continues to draw strong interest. The market logged $862 million in sales through May, with average pricing up 14.2 percent year-over-year. Nationally, industrial assets traded at an average of $133 per square foot, totaling $21.4 billion in volume.
Read the full Yardi Matrix Industrial Market Outlook: June 2025.
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