U.S National Industrial Market | Q1 2025 - Tampa Bay Industrial Advisors

Tampabay / May 8, 2025

U.S. National Market Report | Q1 2025

Despite trade policy uncertainty, the U.S. industrial market remained strong in Q1 2025, with 23.1 msf of net absorption—matching last year’s figure. Warehouse and logistics space led demand with 30 msf absorbed, while manufacturers gave back 5.7 msf. The flight to quality continued, as newer buildings (post-2023) saw over 57 msf of positive absorption, while older, less functional facilities recorded 33 msf in losses.

Check out the full report below presented by Cushman and Wakefield.

Highlights:

- - Industrial Supply
    - Vacancy Rate |7.0% : Vacancy continued to drift higher to 7%. The combination of vacant speculative deliveries and some occupier dispositions caused the U.S. industrial vacancy rate to rise by 30 basis points (bps) to 7%. After remaining historically tight for several straight years, vacancy is now back in line with the historical average—indicative of a more balanced market.
    - Under Construction |270.8M : , the construction pipeline fell by 33% YOY, ending the quarter at 270.8 msf. Of the total, 34% are build-to-suit, in line with year-end (33%). Though the pipeline has continued to thin out notably in the West and Midwest regions, development activity and has ticked marginally higher in the South since the close of the year. On the market level, 23% have had their construction totals fall by 50%
      or more YOY, and just five markets now boast pipelines of 10 msf or more, down from 12 markets one year prior
  - Industrial Demand
    - Net Absorption |23.1 M: Demand remained resilient in the first quarter despite tariff uncertainty. The U.S. industrial sector continued to absorb space in the first quarter, registering 23.1 million square feet (msf) of positive absorption. This was down from 42.4 msf observed in the fourth quarter but on par with the level absorbed in thesame quarter one year ago.
  - Market Pricing
    - Asking Rent | $10.13 PSF: Industrial rents rose 4.3% year-over-year, but nearly 40% of U.S. markets saw declines, keeping the national average flat at $10.11 psf since late 2024. Softer demand, higher vacancies, and a shift toward larger speculative builds have weighed on asking rents. Despite easing pressure, rents in many markets remain up over 50% compared to five years ago, posing challenges for tenants with expiring leases. Smaller spaces under 100,000 sf continue to command higher rents—$12–$15 psf—due to limited supply.
    - Outlook