After a strong start to 2025, the U.S. industrial real estate market is showing signs of cooling as tenant demand eases and broader economic concerns weigh on activity.
Although the sector’s fundamentals remain stable, the latest third-quarter forecast anticipates higher vacancy rates and a pullback in leasing activity, marking a more cautious outlook compared to the previous quarter. Net absorption — the change in occupied industrial space — slipped into negative territory in the second quarter. The decline was largely attributed to a rise in bankruptcies among retailers and third-party logistics providers, along with reduced space requirements from major occupiers such as The Home Depot, UPS, and FedEx.
Logistics facilities are seeing the sharpest slowdown, with the national availability rate for these properties now above 10%. Larger facilities of 100,000 square feet or more are remaining on the market for extended periods as tenants vacate more space than they lease, a trend fueled by continued operational consolidation among logistics companies.
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