In our final blog prior to the release of the 2018 Year-End U.S. Industrial Report and Outlook, we take a look at overall industrial fundamentals. Led by insatiable demand from the third-party logistics and packaging industry industrial activity remained strong in the fourth quarter, with 65.3 million square feet of the net absorption, bringing 2018 net absorption to 276 million square feet, an impressive 8.5% higher than last year, and the second highest annual total on record.
Robust demand dropped the overall vacancy rate to 5% at year-end, a 10-basis-point decline compared with the previous year. Continued robust activity and low vacancies are driving up asking rents, which finished 2018 at an all-time record $5.75 per square foot per year for warehouse/distribution space, $0.10 per square foot per year higher than the previous quarter and $0.34 per square foot per year higher than the previous year. Developers are also breaking ground for new industrial product at a record pace, with 278.2 million square feet in development.
The Inland Empire was the dominant market in 2018 with 25.4 million square feet of net absorption, this was followed by Atlanta, who led the nation the second half of the year with 13 million square feet of net absorption, bringing its 2018 total to 21 million square feet. Dallas-Fort Worth came in third at 19.6 million square feet followed by Chicago at 16.2 million square feet. Indianapolis is the top performing emerging market in the country with 2018 net absorption of 9.2 million square feet, the sixth highest in the U.S.
Stockton/San Joaquin County, one of the fastest growing big-box markets in the country, was the top growth market (net absorption as a percentage of inventory) in the country, growing by 6.3% year to date. This is followed by other major inland port or final-mile markets including Savannah, Lehigh Valley, Charleston and New Hampshire, as the top growing activity markets in the U.S.
As we look ahead, the short-term forecast for industrial real estate is robust thanks to a strong U.S. job market as well as the continued growth in e-commerce sales. In the long-run, there are headwinds to look out for including trade and potential labor shortages. We will cover this as well as other trends impacting the U.S. industrial market in our soon to be released 2018 Year-End U.S. Industrial Report and Outlook.