Post-Covid Warehouse and Distribution Trends in Major U.S. Logistics Markets
Top 10 Largest Logistics Markets by Square Footage: 2020 – Q1 2025
The warehouse/distribution market was one of the biggest benefactors of the Covid pandemic as disrupted supply chains led to record demand. After historic rent increases and construction levels, the overall market has retreated with availabilities sharply rising and market rent increases coming to halt, with some markets lowering rates. With tariffs and other economic uncertainty, the lull may last into the second half of 2025.
However, the overall US narrative was widely varied within the largest logistics markets. For example, the Inland Empire experienced rent growth of over 50 percent between 2020 and 2022, triggered by consumer demand and proximity to the Port of Los Angeles and the Port of Long Beach. Rates fell fast in 2023 and 2024. Still, if an occupier signed a lease before 2019, they will still experience some sticker shock. However, landlords will likely be more willing to negotiate on terms. Other large logistics markets like Chicago and Dallas did not see the same volatility in rates, but rates have increased at a compounded annual growth rate of 6.3 percent and 9.2 percent, respectively.
While most of the largest logistics markets have hit the breaks on new construction starts, Houston, for example, continues to be bullish on warehouse/distribution development. Most markets are waiting for demand to catch up to supply, as the percentage of available space has increased in 8 of the 10 largest markets since 2020. Understanding the nuances of the market can help occupiers think strategically as they look to renew, expand or contract, or have new requirements in the market.
Post Covid: 2020 – 2025 Q1 (10 Largest US Industrial Markets)
Market Rents
Market rents within the Top 10 US warehouse/distribution markets have generally slowed after significant jumps in 2022 and 2023. Both Los Angeles and the Inland Empire markets have dropped asking rates in 2024 and the start of 2025.
Availabilities
Availabilities have generally increased within the top 10 US warehouse/distribution markets in 2022 through 2024 as record high construction levels delivered new space on the market.
Net Absorption SF
Net absorption spiked in 2022 and 2023 before slowing in most markets in 2024. Both Texas markets have net absorption over 100 million square feet since the start of 2020.
Under Construction SF
Except for the Los Angeles warehouse/ distribution market, under construction projects have quickly slowed as tenant demand has leveled off. Construction projects peaked in 2022.
Net Delivered SF
Six markets in the top 10 US warehouse/ distribution markets have added over 100 million square feet of space in the past five years. While new construction starts have sharply fallen, new deliveries will continue at a healthy pace as buildings that began construction 18-months+ ago are completed.
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