Logistics properties ended 2025 with renewed demand after a slow start earlier in the year. Notably, the U.S. logistics sector recorded more than 49 million square feet of net absorption in the fourth quarter. By comparison, only 39 million square feet were absorbed during the first three quarters combined. As a result, demand gains helped limit vacancy growth entering year-end. Consequently, the logistics vacancy rate closed at 8.4 percent. However, vacancy remains elevated at levels not seen in over 13 years. Meanwhile, the market continues facing pressure from excess supply.
At the same time, new construction deliveries increased to more than 54 million square feet in the fourth quarter. Previously, quarterly completions remained below 50 million square feet for most of 2025. Therefore, absorption kept pace with new supply entering the market. In addition, strong demand for modern facilities supported leasing activity. Specifically, pre-leased buildings and newer properties drove much of the recovery. As a result, absorption rose above the three-year quarterly average of 30 million square feet.
Meanwhile, tenants continued shifting away from older logistics properties. However, this trend slowed slightly in the fourth quarter. Importantly, net absorption for newly built properties reached its highest level since 2024. Both 2025-built assets and properties built within the last five years saw rising occupancy. Notably, the strongest demand centered on facilities larger than 500,000 square feet. In fact, occupancy gains for large properties nearly doubled compared to the prior quarter. By contrast, demand for mid-sized properties increased only 14 percent quarter over quarter. Ultimately, rising availability in the mid-sized segment remains a growing market concern.
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