Q2 2025: Market Finding Its Balance

The second quarter showed signs of the market settling into a new rhythm. Vacancy rates inched up slightly to about 7 percent, while rent growth slowed but stayed positive at around 2 percent nationally.

Leasing and Occupancy

Large national retailers and third-party logistics firms continued to drive demand, particularly for spaces over 500,000 square feet. Smaller tenants faced more options and negotiating power due to increased availability.

Regional Highlights

Southern markets such as Atlanta, Houston, and Tampa saw steady absorption, while West Coast markets continued to adjust from earlier overbuilding. Inland Empire’s vacancy reached a multi-year high, but pricing held firm for well-located Class A properties.

Investment Trends

Cap rates expanded slightly as financing costs stayed high. Institutional investors showed renewed interest in sale-leaseback opportunities and well-leased portfolios with strong tenants.

Outlook

The second quarter closed with cautious optimism. Demand was steady, oversupply was easing, and developers were beginning to plan the next cycle with a more disciplined approach.