The U.S. industrial real estate market continues to shift in favor of tenants as vacancy rises for the eleventh consecutive quarter. In the second quarter of 2025, national vacancy reached 7.4%, driven by new supply outpacing demand. This trend is expected to persist through early 2026 as construction completions taper off and leasing velocity remains soft.
Year-over-year rent growth has slowed to 1.7%, the lowest since 2012. Larger logistics buildings are facing the greatest challenges, with vacancy surpassing 10% in some markets. In contrast, small-bay industrial space remains tight, with vacancy below 5%.
Our outlook for the remainder of 2025 suggests that large users of logistics space will continue to benefit from increased leverage and landlord concessions. Meanwhile, smaller tenants may face tighter options and rising competition for high-quality space. As always, planning ahead remains critical to securing the best opportunities in a shifting market.
National industrial real estate trends
- National industrial vacancy rose to 7.4% in Q2 2025, driven by new supply outpacing demand.
- Year-over-year rent growth slowed to 1.7%, the lowest level since 2012.
- Sublease availability is rising, and leasing velocity has declined across most regions.
- Construction deliveries are expected to fall below pre-pandemic averages by mid-2025 and reach an 11-year low in 2026.
- About 294 million SF of industrial space is currently under construction, with Dallas–Fort Worth, Phoenix, and Houston leading the pipeline.
- Small-bay industrial space remains tight, with vacancy below 5% due to limited new development.
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Information contained in this report is provided, in part, from third-party sources, including the U.S. Bureau of Labor Statistics, the Bureau of Economic Analysis, Engineering News-Record, and CoStar Group. Even though obtained from sources deemed reliable, no warranty or representation, expressed or implied, is made as to the accuracy of the information herein.
