Marcus & Millichap’s national industrial prospect index has revealed several surprising developments for the first half of 2025, with many markets posting supply and vacancy trends that defy what they normally average.
Take a look at 10 of them below.
Miami-Dade, a market that historically has been overshadowed by larger port competitors, was the surprise leader on the list of industrial sector prospects, driven by strong in-migration, above-average employment growth and sustained retail sales. Even with new supply, occupancy in spaces under 10,000 square feet remains strong, with vacancy below 3%. This points to local business resilience, according to Marcus & Millichap. In addition, industrial rents have risen past $18 per square foot in Miami, the highest rate outside New York and California.
Houston’s top-10 ranking was another surprise. Despite trailing only Atlanta in deliveries this year, Houston is one of only two major U.S. markets that is expected to experience vacancy compression over two consecutive years, defying conventional logic that high construction rates lead to higher vacancy. The market’s Southern Corridor added the most new inventory and still saw vacancy decline and rent grow. A diverse mix of cargo at the Port of Houston, as well as upgrades to George Bush Intercontinental Airport, have buffered fundamentals.
Minneapolis/St. Paul jumped to the No. 2 spot on the ranking, driven by limited vacancy and growth in advanced manufacturing, despite having less momentum than its peers in the Sun Belt. Vacancy in the Twin Cities is projected to fall sharply after rising for two years, with diversified manufacturing and advanced technology tenants offsetting soft points elsewhere. In some northern submarkets, vacancy was as low as 2% in June, which attracted major investor interest.
Despite a robust five-year population growth forecast, Phoenix ranked in the lower third of the index as supply outpaced demand. The report noted the market’s inventory is growing at over 3.7%, yet vacancy is forecast to exceed 13%, one of the nation’s highest rates. Big-box vacancy exceeds 15%, while small-bay properties remain tight, which highlights an unusually wide gap by property size and type. Semiconductor demand is a unique bright spot in the Phoenix industrial market.
Sharp vacancy swings and a short-term supply overhang have not deterred investors in Las Vegas. The city posted the largest year-over-year vacancy in the country at above 12%, even though it is one of the top 15 markets in terms of population growth and two-thirds of last year’s industrial deliveries remain unoccupied as of mid-2025. Nevertheless, transaction volume was up 20% year-over-year, according to Marcus & Millichap.
In Los Angeles, demand is stabilizing after years of softening and the prospect of trade headwinds. During the first quarter, the city returned to net positive absorption, but overall vacancy remains at a 30-year high. Private buyers, often owner-users, are stepping into the market as institutions exit due to pricing and risk sensitivity. Submarket performance is diverging sharply, with demand in Antelope Valley surging while the San Fernando Valley’s vacancy has tripled.
A different story is unfolding to the south, where San Diego has fallen to last place on the index with a projected vacancy rate of 10.7%, despite its cross-border trade potential. That is the highest it has been since 2011. Vacancy among modern properties is 15.9% while pre-2000 property vacancy stands at 8.2%, a significant disparity. The construction of a new $150 million truck port in San Diego is expected to boost the market eventually.
Despite a recent doubling of vacancy, net absorption in Indianapolis is expected to exceed supply this year, driving vacancy down even as cap rates reach a nationwide high of 8.6%, according to the report. A combination of modern space, high yields and logistics connectivity in outer corridors is attracting investors at an unusually high level for this stage of the cycle, said the report.
Baltimore is facing the steepest average rent correction among major metros, down 18% from its original peak. That said, investment interest remains resilient, with large-scale deals more than doubling, signaling confidence in core and infill areas despite weak fundamentals. A limited construction pipeline and key infrastructure upgrades, including the expansion of the Howard Street Tunnel to accommodate double-stack freight, should help foster a recovery in the market, according to the report.
Finally, sub-50,000 square foot spaces are outperforming in Cleveland, with vacancy below 3%. This is driving private investor interest despite subdued marketwide leasing trends. In addition, central and highway-adjusted areas are attracting robust demand, while big-box and multi-tenant vacancy is climbing in the market, highlighting a hyper-local divergence by size and location, according to the report.
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