The industrial market is exhibiting divergent trends based on property size. For spaces over 100,000 square feet (SF), availability is elevated, and rent growth has effectively stalled. In contrast, small industrial spaces remain relatively scarce, with limited new developments and consistent demand.
Overall, vacancy rates in the U.S. industrial market continue to climb, reaching about 7.6%. This is mainly due to new supply, especially in large logistics facilities, surpassing demand. Vacancy is projected to stay high through 2026, leading to better options and more bargaining power for some tenants, especially those with flexibility in building size, lease duration, or timing.
National industrial real estate trends
- Leasing activity has slowed to pre‑2020 levels, with large warehouse and distribution buildings leasing more slowly amid elevated new supply.
- Smaller industrial spaces continue to show steadier demand and faster leasing, supported by limited new construction.
- Year-over-year rent growth has slowed to 1.2%, its lowest rate since 2012, with national rents flat from last quarter. Differences in demand between large and small spaces are driving pricing, with greater flexibility in larger facilities and firmer rents in smaller buildings.
- New industrial construction is slowing after a record development cycle, as fewer projects break ground and deliveries begin to taper. Despite this slowdown, recently completed large logistics facilities continue to add supply in some markets, while construction of small‑bay industrial space remains limited.
Hot topic this quarter: Qualified production property deduction
A hot topic in today’s manufacturing space is the qualified production property (QPP) deduction. The QPP deduction allows businesses to immediately deduct 100% of the cost of qualifying production facilities in the year they are placed in service. Read the report to learn more about what qualifies, and contact us for help determining whether leasing, acquiring, or constructing a facility best supports your operational needs and long-term goals.
Download the full 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. This report will give you full insight into the topics mentioned above, along with a variety of other statistics to help you stay ahead of market trends.
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.
