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Q2 2025 U.S. Industrial Market: Net Absorption Holds Steady, Corporate Demand Fuels Modern Warehouse Leasing Amid Rising Vacancy

Gretchen Shoenberger • 7/9/2025

CHICAGO, July 8, 2025 – The latest research from Cushman & Wakefield (NYSE: CWK) highlights the U.S. industrial market’s continued resilience in the second quarter, despite broader economic uncertainty and regional volatility. National net absorption totaled 29.6 million square feet (msf), on par with the first quarter’s 30.3 msf and exceeding expectations, with demand concentrated in newly built logistics product.

“Large occupiers remain active, with a continued flight to quality driving demand for modern logistics space,” said Jason Price, Senior Director, Americas Head of Logistics & 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.”

Warehouse space completed since 2023 accounted for more than 50 msf of absorption in Q2, underscoring sustained interest in higher-quality buildings. At the same time, some markets saw consolidation and downsizing continue to outweigh demand. The West region recorded negative net absorption of 2.3 msf, led by losses in the Inland Empire (-1.8 msf) and Los Angeles (-1.1 msf).

Q2 2025 Industrial Quarterly Image Press Release.png

New leasing activity totaled nearly 309 msf year-to-date, marginally outpacing the midyear 2024 total of 307.9 msf. Seven major markets exceeded 5.0 msf of new leasing in Q2, with Dallas/Ft. Worth and Chicago each surpassing 10 msf. A late-quarter surge of large block deals (500,000+ sf) in Atlanta, Houston, Chicago, New Jersey, and Dallas/Ft. Worth helped lift quarterly leasing totals above Q1’s 151.9 msf.

Despite steady demand, the pace of new supply continued to exceed net absorption. More than 71.5 msf of new completions were delivered in Q2, with the South and West regions accounting for 68% of total volume. Although development activity remains elevated, completions have declined 44.6% year-over-year and are down 59% from the Q3 2023 peak.

The share of build-to-suit (BTS) deliveries climbed to 30.4% year-to-date, up from 16.8% one year ago, as developers adjust to evolving tenant needs and a softening demand environment. While total product under construction dipped only slightly quarter-over-quarter, the speculative share declined from 66.0% to 62.3%—the lowest level since Q2 2020. Thirteen markets saw year-over-year declines of 50% or more in construction activity, down from 16 in the prior quarter.
The national industrial vacancy rate rose to 7.1%, up 10 basis points from the historical pre-pandemic average of 7.0%, as new product continued to outpace demand. Vacancy rates for smaller warehouses (under 100,000 sf) remained low at 4.4%, although this segment also experienced an 80-basis-point year-over-year increase.

Average asking rents rose modestly, reaching $10.12 per square foot at the end of Q2—a 0.9% increase from Q1. On an annual basis, rents grew by 2.6%, though both the Northeast (-1.5%) and West (-1.9%) regions posted year-over-year declines. Eighteen of the 83 markets tracked posted annual rent growth of 5% or more, down from 21 in the first quarter. Pricing for smaller-warehouse facilities remained elevated, averaging $13.51 psf—31% above space sized over 100,000 sf.

“Demand for logistics space remains resilient. Many companies accelerated imports to manage tariff exposure, prioritizing agility and flexibility in their supply chains. This is driving a noticeable uptick in activity beginning in June, as occupiers moved quickly during a window of lighter tariff pressure,” said Jason Tolliver, President, Logistics & Industrial Americas at Cushman & Wakefield. “Looking forward, market fundamentals are expected to strengthen, with demand gradually improving and supply falling rapidly. For tenants the next 6 to 12 months may present the best opportunity to secure favorable lease terms.”


About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2024, the firm reported revenue of $9.4 billion across its core service lines of Services, Leasing, Capital markets, and Valuation and other. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture.  For additional information, visit www.cushmanwakefield.com.

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