Q1 2025: Market Cooling After Record Growth

The start of 2025 brought a noticeable slowdown across U.S. warehouse and industrial real estate. After several years of rapid expansion, developers and investors entered the year more cautiously. National vacancy rose to around 6.8 percent, up from 5.5 percent the year before, as new buildings continued to hit the market faster than they were leased.

Demand and Leasing

Leasing activity softened, particularly in secondary markets. E-commerce growth stabilized, and many companies were focused on optimizing their existing footprints instead of expanding. Still, major logistics hubs like Dallas–Fort Worth, Chicago, and Inland Empire remained among the most active areas.

Construction and Supply

Rising interest rates and construction costs slowed new project starts. Total space under construction dropped nearly 25 percent from the previous year, signaling the market was beginning to self-correct. Developers turned attention to completing in-progress projects and filling vacant space.

Outlook

By the end of the first quarter, signs pointed to stabilization rather than decline. While speculative builds became rarer, demand for high-quality logistics space near ports and major highways remained strong.