The U.S. industrial real estate market remained resilient in the second quarter of 2025, even as investors and developers faced rising interest rates, financing challenges, elevated material and labor costs, supply chain disruptions, economic uncertainty and regional volatility, according to reports from JLL and Cushman & Wakefield.
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Key Findings from JLL
- Leasing activity rose 4.2% year-over-year, driven by third-party logistics (3PL) firms, which accounted for 16.5% of all activity in Q2.
- The vacancy rate increased to 7.5%, attributed to tariff uncertainties and new deliveries. JLL noted this is a temporary trend, as such rates have not been seen since 2013.
- Quarterly net absorption was the lowest since 2010. However, owner-user and build-to-suit (BTS) occupancies helped bolster activity.
Despite the quarterly decline, year-to-date net absorption grew in several markets.
Cushman & Wakefield Highlights
Seven markets exceeded five million s.f. of new leasing in Q2, with Dallas/Fort Worth and Chicago each surpassing 10 million s.f.
Late-quarter large-block deals in Atlanta, Houston, Chicago, New Jersey and Dallas/Fort Worth helped lift quarterly leasing totals above first-quarter levels.
“Large occupiers remain active, with a continued flight to quality driving demand for modern logistics space,” said Jason Price, senior director and Americas head of logistics and industrial research at Cushman & Wakefield. “While absorption is still below historical norms, second-quarter leasing activity and the strength of newer product show that the industrial sector is adapting to shifting market forces.”
Largest New Occupancies in Q2 (Colliers)
- DrinkPAK: New lease, Fort Worth, Texas, 1,403,152 s.f.
- CJ Logistics: Sublease, Stockton, Calif., 1,391,610 s.f.
- Boren & Sons Trucking: New lease, Pataskala, Ohio, 1,277,851 s.f.
- Performance Team (Maersk): New lease, Cinnaminson, N.J., 1,200,000 s.f.
- DHL: New lease, Greer, S.C. (Greenville-Spartanburg), 1,091,888 s.f.
- UNFI: New lease, Sarasota, Fla., 1,000,000 s.f.
Development Trends
Development activity remains elevated, with new builds outpacing demand. However, completions declined 44.6% year-over-year, according to Cushman & Wakefield. Contributing factors include:
- Developers reassessing project viability mid-construction to avoid oversupply.
- A shift toward securing tenants before finalizing construction, slowing project timelines.
- Rising interest rates and inflation in materials and labor, causing delays and bankruptcies.
- Supply chain disruptions and labor shortages.
- Complex regional permitting and zoning regulations.
- Caution amid economic uncertainty.
Colliers reports that while these challenges may slow industrial demand in the short term, net absorption is expected to remain positive in the coming quarters.
Projects moving forward are build-to-suit, tailored to tenant specifications. BTS deliveries rose to 30.4% year to date, up from 16.8% a year earlier, according to Cushman & Wakefield.
Forecast
According to Colliers, the U.S. industrial market outlook includes:
- Gradual rent growth of 3% to 7% annually through 2027.
- Vacancy rate is expected to peak at 7.6% in the coming quarters, as tenant demand and new supply begin to align.
- Economic uncertainty will lead tenants to renew in place or downsize operations.
- Leases continue to be signed across all size ranges, but overall demand is expected to remain muted in the near term.
- Demand continues to favor modern, high-efficiency assets in strategic logistics hubs.
