The U.S. industrial market overall remains favorable for many tenants as elevated vacancy and availability continue to provide more options and negotiating leverage than in recent years.
While leasing activity has strengthened and returned to pre-pandemic norms, years of supply growth continue to weigh on market conditions, particularly in larger warehouse and distribution facilities. Looking ahead, declining construction activity is expected to reduce future supply additions.
National industrial real estate trends
- Industrial leasing activity has slowed, and availability remains elevated as new supply and available listings continue to outpace absorption in many markets, particularly among larger logistics facilities.
- National asking rents were essentially unchanged since last quarter, while annual rent growth held at 1.3%, the slowest pace in more than a decade.
- The record industrial development cycle continues to wind down as construction starts remain well below peak levels.
Hot topic this quarter: Aerospace and defense
Growing real estate demand across the aerospace and defense sector is increasing the need for specialized manufacturing, testing, engineering, and classified facilities. Meanwhile, rising construction costs, longer project timelines, and evolving government requirements are making real estate decisions more complex.
As organizations pursue new contracts and growth opportunities, SCIF requirements are appearing more frequently in federal RFPs and performance guidelines. Contractors without access to accredited space may be unable to pursue certain opportunities, but constructing a SCIF before work is awarded can require significant upfront investment.
We go into more detail about SCIF requirements and trends in defense real estate in our report. Download below.
Download the industrial real estate market report to learn more
If you’d like to learn more about the nation’s industrial real estate outlook, download the full report below.
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.
