Q2 2025 Occupier Outlook - Industrial

Vacancy has increased for twelve straight quarters, with direct vacancy reaching 10.4 percent. The softening of the market has shifted negotiating power to tenants, a position that occupiers have not held for several years. Lease rate increases have come to a halt, with quarter-over-quarter change registering 0 percent. The trickle-down effect of a five-year run of escalating construction starts. The record deliveries have resulted in downward pressure on the health of the overall industrial market.  Leasing activity has remained steady, although slightly lagging the last two years. Many occupiers are waiting for consumers to react to potential lingering inflation and the fallout from increasing tariffs.  This is particularly relevant in the manufacturing and distribution sectors. The pace of new available space listings hitting the market in the first half of 2025 recorded the fourth-highest level, raising the U.S. industrial availability rate. Long-term administration policies could increase requirements for manufacturing tenants. 
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