Industrial & warehouse cap rates by market (2026)
An industrial cap rate is the yield an industrial or warehouse asset trades on — net operating income divided by price. Heading into 2026, prime industrial cap rates have broadly firmed and stabilised after the 2023–24 expansion that followed rising interest rates, with most major US, Australian and New Zealand markets sitting in an indicative 5.0%–7.0% range. Logistics and modern distribution space remains the tightest segment — supply-constrained markets like the Inland Empire, New Jersey and Sydney price toward the low end. The figures below are indicative ranges, not valuations.
Indicative 2026 benchmarks — 12 markets
- Cap rate
- 5.75%–6.75%
- Prime rent
- $8.50–$11.00 /sq ft/yr
- Vacancy
- 7.5%–9.5%
- Cap rate
- 5.75%–6.75%
- Prime rent
- $6.50–$9.00 /sq ft/yr
- Vacancy
- 7.0%–9.0%
- Cap rate
- 5.00%–6.00%
- Prime rent
- $12.00–$16.00 /sq ft/yr
- Vacancy
- 6.0%–8.0%
- Cap rate
- 5.75%–6.75%
- Prime rent
- $7.00–$10.00 /sq ft/yr
- Vacancy
- 5.5%–7.5%
- Cap rate
- 5.50%–6.50%
- Prime rent
- $9.00–$12.50 /sq ft/yr
- Vacancy
- 8.5%–11.0%
- Cap rate
- 5.25%–6.25%
- Prime rent
- $13.50–$18.00 /sq ft/yr
- Vacancy
- 5.0%–7.0%
- Cap rate
- 5.25%–6.25%
- Prime rent
- $11.00–$14.50 /sq ft/yr
- Vacancy
- 5.5%–7.5%
- Cap rate
- 5.25%–6.25%
- Prime rent
- $160–$220 /sqm/yr
- Vacancy
- 1.5%–3.5%
- Cap rate
- 5.25%–6.50%
- Prime rent
- $110–$160 /sqm/yr
- Vacancy
- 2.0%–4.0%
- Cap rate
- 5.50%–6.50%
- Prime rent
- $130–$180 /sqm/yr
- Vacancy
- 1.5%–3.5%
- Cap rate
- 6.00%–7.00%
- Prime rent
- $95–$140 /sqm/yr
- Vacancy
- 2.0%–4.5%
- Cap rate
- 5.50%–6.75%
- Prime rent
- $140–$200 /sqm/yr
- Vacancy
- 1.5%–3.0%
US rents quoted per square foot per year (typically net/NNN); Australian and New Zealand rents quoted per square metre per year (net face), matching local convention. All values indicative ranges.
Key takeaways
- Cap rate = net operating income ÷ price — the yield the asset trades on.
- 2026 picture: prime industrial yields broadly firmed/stabilised after the 2023–24 expansion.
- Tightest segment: logistics in supply-constrained markets (Inland Empire, New Jersey, Sydney).
- Lower cap rate ≠ better deal — it reflects perceived risk and expected rent growth.
How to read an industrial cap rate
A cap rate is net operating income (NOI) divided by price, expressed as a percentage. A warehouse with $1,000,000 NOI bought at $16,700,000 trades on a 6.0% cap rate. It strips out financing, so two buildings can be compared on the property and its income alone. Crucially, a lower cap rate means a higher price per dollar of income — investors accept a tighter yield when they believe the income is safer or will grow faster.
That is why headline cap rates should never be read in isolation. A 7.0% asset is not automatically better value than a 5.5% one: the gap usually reflects differences in lease covenant strength, weighted average lease term (WALT), building grade, location and letting risk. The ranges on this page are a starting point for orientation, not a substitute for asset-level underwriting.
Cap rates vs lease rates
Cap rate and lease rate measure different things. The cap rate prices the asset for sale — what an investor pays per dollar of income. The lease rate (rent) prices occupancy — what a tenant pays to use the space, quoted per square foot per year in the US or per square metre per year across Australia and New Zealand. The two are linked: when market rents rise and vacancy is low, expected income growth strengthens, which tends to compress cap rates as buyers bid up for that growth.
For funds and landlords, this is why a market's rent and vacancy columns matter as much as its cap rate. A sub-3% vacancy market with rising face rents — Sydney, Brisbane and Auckland in the table above — supports tighter yields than a market where new supply is lifting vacancy and softening rent growth.
What's driving 2026 industrial yields
After interest rates climbed through 2022–24, industrial cap rates expanded from the record-tight levels of 2021. Heading into 2026, the picture is one of stabilisation: the cost-of-capital shock has largely been repriced, transaction volumes are recovering, and prime yields in the strongest logistics markets have stopped widening — in some submarkets they have begun to firm again as competition for modern, well-located space returns.
The dispersion is structural. Supply-constrained, high-barrier markets with near-zero vacancy keep the tightest yields, while markets that absorbed a wave of new development carry higher vacancy and price wider. Underpinning demand are the same durable drivers — e-commerce fulfilment, supply-chain reshoring and a persistent shortage of modern, high-clearance distribution space — which keep logistics the most sought-after segment of the asset class.
Frequently asked questions
What is a good industrial cap rate in 2026?
In 2026, prime industrial and logistics cap rates broadly sit in an indicative 5.0%–7.0% range across major US, Australian and New Zealand markets, with the tightest logistics assets in supply-constrained submarkets (Inland Empire, New Jersey, Sydney) at the lower end. A 'good' cap rate depends on the asset's lease covenant, WALT and location — a higher cap rate is not automatically a better deal if it reflects letting risk or a weaker tenant. These figures are indicative ranges, not a valuation.
Why are warehouse cap rates lower than retail?
Lower cap rates mean buyers will pay more per dollar of income, which reflects perceived lower risk and stronger income growth. Logistics and warehouse demand — driven by e-commerce, supply-chain reshoring and structural undersupply of modern space — has been more resilient than much of physical retail, so investors accept a tighter yield. The trade-off is that retail can offer a higher headline cap rate to compensate for greater income and obsolescence risk.
What's the difference between cap rate and lease rate?
A cap rate is an investment yield — net operating income divided by property value — used to price a sale. A lease rate (or rent) is what a tenant pays to occupy space, usually quoted per square foot per year in the US or per square metre per year in Australia and New Zealand. Rising market rents can compress cap rates by lifting expected income growth, but the two measure different things: one prices the asset, the other prices its occupancy.
Where are industrial cap rates lowest?
Indicatively, the lowest prime industrial cap rates in 2026 are in supply-constrained logistics markets with strong rent growth and near-zero vacancy — the Inland Empire and New Jersey in the US, and Sydney in Australia, which all sit toward the 5.0%–5.5% end of the indicative range. Markets with more land supply or higher vacancy, such as Phoenix or Perth, tend to price wider. These are indicative ranges compiled from public broker commentary, not valuations.
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