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Insight

21 April 2025

U.S. Industrial Market Dynamics, Q1 2025

Industrial absorption and leasing improved in Q1 despite headwinds

Risk management

Project management

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Business and professional services

Authors

MR

Mehtab Randhawa

Global Head of Industrial Research

EK

Elizabeth Keiger

KN

Kelsey Nastasi

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Industrial cargo ship

The industrial real estate sector posted its’ best quarter since Q2 of last year, with 123.3 million s.f. of leasing activity.
Leasing activity highlighted a strong preference among occupiers for mid-sized facilities. Leases ranging from 100,000 to 250,000 s.f. emerged as a significant driver of market activity, accounting for 27.3% of total leasing volume.
New industrial deliveries were unchanged from the previous quarter with 79.6 million s.f. coming online in Q1.
The development pipeline contracted to its lowest point since 2015, shrinking by 29.9% year-over-year to 253.2 million square feet. Of this total, 86.7% is anticipated to be delivered in 2025.
The vacancy rate climbed to 7.3%, a 20 basis-point increase from the previous quarter, due to ongoing deliveries of unoccupied industrial space.
With increased leasing activity in Q1, net absorption increased 43.4% year-over-year as 40 million s.f. was absorbed.

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