What are typical warehousing rates per square foot in the U.S.? (2025 guide)

In 2025, the national average U.S. warehouse lease rate is $9.12 per square foot annually, according to Cushman & Wakefield’s Q2 2025 industrial market report. CommercialEdge reports in-place rents at $8.44 per square foot, while coastal hubs can exceed $12 and mid-America markets average $6–$8. Add about $1–$3 per square foot for operating (NNN) charges.

The U.S. warehouse rental market has entered a period of stabilization after years of explosive growth. Current national averages reflect a 2.6% year-over-year increase despite rising vacancy rates that have reached their highest levels in over a decade. For supply chain managers, CFOs, and e-commerce founders evaluating warehouse space, understanding these benchmarks—and the factors driving regional variations—is critical for accurate budgeting and successful lease negotiations.

Numbers at a glance

• National average asking rent: $9.12 per square foot annually (2025)
• Smaller warehouses (<100k sq ft): $9.51 per square foot annually
• Larger warehouses (>100k sq ft): $7.26 per square foot annually
• Current vacancy rate: 7.1% nationally (Q2 2025)
• Year-over-year rent growth: +2.6% (2024-2025)
• West Coast premium markets: $8–$12 per square foot annually
• Sun Belt growth hubs: $8.50–$12+ per square foot annually
• Mid-America markets: $6–$8 per square foot annually

Current national benchmarks

The warehouse rental landscape has shifted dramatically from the pandemic-era boom years. After experiencing double-digit rent increases through 2022, the market has cooled considerably.

2025 national average: $9.12 per square foot

According to Cushman & Wakefield’s Q2 2025 industrial market report, the national average asking rent for warehouse space sits at $9.12 per square foot annually. This represents a modest 2.6% increase from 2024, a sharp deceleration from the 8-12% annual growth rates seen during 2020-2022.

Size matters: smaller spaces command premiums

Warehouse size significantly impacts rental rates. Smaller facilities under 100,000 square feet average $9.51 per square foot—about 31% higher than larger spaces exceeding 100,000 square feet, which average $7.26 per square foot. This premium reflects the higher per-unit operating costs and greater flexibility that smaller spaces provide to tenants.

Vacancy surge creates tenant leverage

National vacancy rates have climbed to 7.1% by Q2 2025, the highest level in over a decade. This increase stems from speculative development during the pandemic that has now outpaced tenant absorption. The elevated vacancy gives tenants significantly more negotiating power than they’ve had in recent years.

Regional rate breakdown

Geographic location remains the single largest driver of warehouse rental costs, with coastal markets commanding substantial premiums over inland alternatives.

West Coast – highest tier ($8–$12 per square foot)

California’s Inland Empire and Los Angeles markets lead national pricing, with annual rents ranging from $8–$12 per square foot. The Los Angeles market specifically averages $7.37 per square foot monthly (approximately $8.84 annually) on a triple-net basis as of Q1 2025, representing a 51.6% increase since 2019 despite recent softening.

The San Francisco Bay Area commands even higher rates at $7–$11 per square foot annually, driven by severe land constraints and technology sector demand. Seattle rounds out the West Coast premium tier at $14–$19 per square foot annually, making it one of the nation’s most expensive industrial markets.

Northeast port corridors ($8–$11 per square foot)

Major Northeast markets like Boston, Baltimore, and the Northern New Jersey corridor maintain rates around $8.50–$11 per square foot annually. Baltimore specifically averages $8.61 per square foot with moderate vacancy rates around 8.8%. These markets benefit from proximity to major ports and dense population centers, though they face constraints from limited developable land.

Sun Belt growth hubs ($8.50–$12+ per square foot)

The Sun Belt continues to experience the strongest rent growth nationally, with markets like Miami ($12.85 per square foot), Dallas-Fort Worth, Nashville, and Atlanta seeing 8%+ annual increases. These markets benefit from rapid population growth, business relocations, and robust e-commerce demand, maintaining vacancy rates in the 3-6% range—well below the national average.

Phoenix deserves special mention as it leads the West in industrial construction with 15.1 million square feet under development in early 2025, indicating strong demand despite rising supply.

Mid-America and tier-2 markets ($6–$8 per square foot)

Secondary markets in the Midwest and smaller metropolitan areas offer the most affordable warehouse space, typically ranging from $6–$8 per square foot annually. These markets provide cost advantages for companies prioritizing logistics efficiency over proximity to major population centers.

What drives warehouse lease rates?

Understanding the factors that influence warehouse rental costs helps tenants make informed decisions and negotiate more effectively.

Location and labor market access

Proximity to major highways, ports, airports, and urban centers can increase lease rates by 15% or more. Labor market strength also plays a crucial role—markets with abundant warehouse workers can support higher rents due to operational efficiency gains.

Building class and clear height specifications

Warehouse buildings are classified as Class A, B, or C based on construction quality, age, and features. Class A buildings with modern amenities, superior construction, advanced fire protection, and clear heights of 28+ feet command premium rents. Higher clear heights allow for taller racking systems and increased storage density, making them particularly valuable for regional distribution operations.

E-commerce demand and automation readiness

The continued growth of e-commerce has fundamentally altered warehouse demand patterns. Facilities designed for automation—with features like reinforced floors for robotics, advanced electrical systems, and optimized layouts—can justify higher rents through operational efficiency gains.

Operating expense models (NNN vs. gross leases)

Most warehouse leases use a triple-net (NNN) structure where tenants pay base rent plus their proportional share of property taxes, insurance, and common area maintenance. Understanding these additional costs is crucial for accurate budgeting.

How to calculate your true cost per square foot

Warehouse lease costs extend beyond the quoted base rent, making accurate calculation essential for budgeting and comparison purposes.

Step-by-step calculation with example

Consider a 50,000 square foot warehouse with the following terms:

• Base rent: $8.50 per square foot annually
• Property taxes: $1.20 per square foot annually
• Insurance: $0.40 per square foot annually
• CAM charges: $0.90 per square foot annually

Total annual cost calculation:

• Base rent: 50,000 × $8.50 = $425,000
• NNN expenses: 50,000 × ($1.20 + $0.40 + $0.90) = $125,000
• Total annual cost: $550,000
• True cost per square foot: $11.00 annually
• Monthly payment: $45,833

Hidden costs and additional considerations

Beyond base rent and NNN charges, consider these potential additional expenses:

• Utilities (can range from $0.50–$2.00 per square foot annually)
• Material handling equipment rental
• Racking and storage systems
• Security systems and monitoring
• Tenant improvement allowances (typically $2–$5 per square foot for warehouse modifications)

2025 pricing trends to watch

Several key trends are shaping the warehouse rental market as we move through 2025.

Cooling vacancy yet sticky rents

Despite vacancy rates reaching 7.1% nationally—the highest in over a decade—rents have remained relatively sticky. This reflects landlords’ reluctance to reduce asking rents significantly, instead offering concessions like free rent periods or tenant improvement allowances.

Projected moderation through 2026

Industry analysts project continued modest rent growth of approximately 2% annually through 2026. This represents a dramatic slowdown from the 8-12% annual increases seen during 2020-2022. The moderation reflects market rebalancing as speculative supply is absorbed and new construction starts decline.

Inland versus coastal spread widening

The rent differential between coastal and inland markets continues to expand. While coastal markets face land constraints and regulatory challenges, inland markets benefit from lower development costs and business-friendly policies, creating opportunities for cost-conscious tenants.

Budgeting and negotiation checklist

Successful warehouse leasing requires thorough preparation and strategic negotiation.

Research and benchmarking

• Identify at least three comparable properties within a 10-mile radius
• Analyze recent lease transactions in your target market
• Understand local vacancy rates and absorption trends
• Research planned developments that might affect future supply

Financial modeling

• Calculate total occupancy costs over 5- and 10-year periods
• Factor in annual escalation clauses (typically 2-4% annually)
• Model different lease term scenarios to identify optimal length
• Include moving costs and business disruption in your analysis

Negotiation strategies

• Request tenant improvement allowances for warehouse modifications
• Clarify HVAC, lighting, and maintenance responsibilities
• Negotiate caps on annual rent increases
• Secure expansion and renewal options at predetermined rates
• Consider shorter initial terms with extension options in uncertain markets

Alternative market evaluation

• Evaluate secondary markets within your logistics network
• Research state and local economic incentives
• Consider build-to-suit options for long-term commitments
• Analyze total landed costs including transportation and labor

Frequently asked questions

What is the average warehouse rent per square foot in 2025?

The national average is approximately $9.12 per square foot annually, though this varies significantly by region, building quality, and size. Smaller warehouses under 100,000 square feet average $9.51 per square foot, while larger facilities average $7.26 per square foot.

Why are warehouse rates rising faster than office rents?

E-commerce growth, supply chain reshoring, and the need for last-mile distribution facilities have created sustained demand for warehouse space. Unlike office real estate, which faces structural challenges from remote work, industrial real estate benefits from fundamental economic shifts toward goods distribution.

How do operating expenses (NNN) affect the total rate?

Triple-net charges typically add $1–$3 per square foot annually to base rent. These cover property taxes, insurance, and common area maintenance. Always request detailed NNN estimates and understand reconciliation procedures to avoid surprises.

What is a good price for warehouse space in Texas?

Texas markets vary significantly, but most fall below coastal averages. Dallas-Fort Worth and Houston typically range from $7–$10 per square foot annually, while secondary Texas markets may offer rates in the $5–$7 range.

How much cheaper is Class B versus Class A industrial space?

Class B warehouse space typically costs 15-25% less than comparable Class A facilities. However, the savings may be offset by higher operating costs, lower efficiency, and potential limitations on automation or modern logistics operations.

Are warehouse rents expected to drop in 2026?

Most analysts project continued modest growth around 2% annually rather than declines. While vacancy rates may peak in late 2025, new construction starts have slowed significantly, which should support rent stability as excess supply is absorbed.

What lease term gets the best rate?

Landlords typically offer the best rates for 5-7 year terms, balancing their desire for stability with tenants’ flexibility needs. Shorter terms may carry rate premiums, while very long terms (10+ years) might secure modest discounts but reduce flexibility.

How do I convert monthly rent to annual cost per square foot?

Multiply the monthly rate by 12 to get the annual rate. For example, $0.75 per square foot monthly equals $9.00 per square foot annually. Always clarify whether quoted rates are monthly or annual, as this varies by market and broker.

Key takeaways

• Market conditions favor tenants: Rising vacancy rates (7.1% nationally) have shifted negotiating power away from landlords for the first time in years
• Location drives pricing: West Coast facilities command 50-100% premiums over secondary markets, creating opportunities for cost-conscious companies
• Size matters: Smaller warehouses (<100k sq ft) carry a 31% premium over larger facilities due to operational flexibility
• Stable outlook ahead: Industry analysts project modest 2% annual rent growth through 2026—a dramatic cooldown from pandemic-era increases
• Total cost focus: Factor in NNN charges ($1-$3/sq ft) and hidden costs like utilities, equipment, and tenant improvements for accurate budgeting

Sources and references

• Cushman & Wakefield Q2 2025 U.S. Industrial Market Report — National vacancy rates and rent data
• CommercialEdge National Industrial Report April 2025 — Regional rent analysis and market trends
• Brown West Logistics Average Warehouse Cost Analysis — Size-based rent differentials and regional breakdowns
• MMCG Investment U.S. Industrial Real Estate Market Analysis 2025 — Market outlook and vacancy projections