Average rent per square foot paid for industrial space U.S. 2017-2023, by type

Rents for industrial real estate in the U.S. have increased since 2017, with flexible/service space reaching the highest price per square foot in 2023. As of the fourth quarter of the year, flex/service space cost 16.4 U.S. dollars per square foot. Manufacturing facilities, warehouses, and distribution centers had lower rents, at nine and 9.7 U.S. dollars per square foot, respectively. Los Angeles, Orange County, and Inland Empire, California, are some of the most expensive markets in the country.

Office real estate is pricier

Industrial real estate is far from being the most expensive commercial property type. For instance, average rental rates in major U.S. metros for office space are much higher than those for industrial space. This is most likely because office units are generally located in urban areas where there is limited space and thus higher demand, whereas industrial units are more suited to the outskirts of such urban areas. Industrial units, such as warehouses or factories, require much more space because they need to house large, heavy equipment or serve as a storage unit for future shipments.

Big-box distribution space is gaining in importance

Warehouses and distribution may currently command the lowest average rent per square foot among industrial space types, but this looks set to change in the future. The taking rent is trending upwards and the share of available distribution centers which are unoccupied is falling. More and more big-box distribution space inventory is coming onto the market every year to meet demand.