Despite a considerable increase in available U.S. industrial real estate capacity during 2023, rent rates for warehouse and distribution space jumped far faster.

According to year-end data from real estate firm Colliers, lease rates for U.S. warehouse and distribution space spiked 20.6% year-over-year last year and reach an all-time high average of $9.72 per square foot.

And rates aren’t expected to come down any time soon. Colliers’ research foreccasts more rent increases even though vacancy rates remain historically low, though rate increases are expected to pace more reasonably than the unprecedented increases seen since 2021.

Here’s how average industrial asking lease rates looked in the largest U.S. metropolitan areas at the end of 2023, and their overall trajectory for 2023, according to Colliers’ report:

• Greater Los Angeles: $19.19 (falling)
• New York: $17.40 (rising)
• San Francisco Bay area: $16.45 (rising)
• Philadelphia: $11.02 (falling)
• Houston: $9.20 (rising)
• Dallas/Ft. Worth: $8.05 (rising)
• Atlanta: $8.40 (rising)
• Detroit: $6.56 (falling)
• Chicago: $6.78 (rising)

Vacancy Rate

Colliers found that 606 million square feet of new industrial real estate supply (completed construction) was added in 2023, while only 229 million square feet was net absorbed — a 2.6x ratio. This led to vacancy rates increasing in all four regions of the country to a nationwide average rate of 5.6%, up 195 basis points from the end of 2022 and the highest rate since 2016’s second quarter, but still trailing the 15-year average of 6.2%.

Find much more information at Colliers’ 2023 Year-End Industrial Markets Statistics report here.