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By David Kelley, Matt Mowell                                                     

Industrial rent growth varies widely across markets in every cycle. As we forecast rent growth over the next five years, we expect a distinct performance gap between the top and bottom markets (Figure 1).

Asking rents are declining in regional and national distribution hubs like Riverside, CA, which had seen significant growth in the immediate aftermath of the COVID pandemic. These large hubs typically have complex supply pipelines, as they are targeted by major developers, and are highly sensitive to macroeconomic shifts. Many of these markets currently have a large supply overhang following the recent construction boom, which will likely cause their rent growth to underperform in coming years. In contrast, construction did not surge as aggressively in smaller markets like Louisville; as a result, they have more balanced supply-demand dynamics, are less affected by macroeconomic volatility and thus should outperform over the next five years.

Variability in performance has been consistent across cycles. Markets here rents are forecast to increase the most in coming years, such as Charlotte or Omaha, also saw slightly less contraction during the Global Financial Crisis, as they were less susceptible to both overbuilding and consumer belt tightening. Conversely, nationally significant markets like Miami and Los Angeles performed very well during both the halcyon days of the 2010s and the COVID pandemic.

Figure 1: Industrial EA Asking Rent CAGR (%) by Cyclical Period; Aggregated by the Top and Bottom 15 Markets for Rent Growth Through 2029

Source: CBRE Econometric Advisors

*Markets are categorized in the top 15 and bottom 15 based on their forecast performance for 2025-2029.