The latest research from Cushman & Wakefield highlights the U.S. industrial market’s continued resilience in the second quarter, despite broader economic uncertainty and regional volatility.
National net industrial absorption totaled 29.6 million square feet in the second quarter, according to Cushman & Wakefield’s second quarter national industrial report. That is on par with the first quarter’s 30.3 million square feet, with demand concentrated in newly built logistics product.
“Large occupiers remain active, with a continued flight to quality driving demand for modern logistics space,” said Jason Price, Senior Director, Americas Head of Logistics & Industrial Research at Cushman & Wakefield. “While absorption is still below historical norms, second-quarter leasing activity and the strength of newer product show that the industrial sector is adapting to shifting market forces.”
Warehouse space completed since 2023 accounted for more than 50 million square feet of absorption in the second quarter, underscoring sustained interest in higher-quality buildings. At the same time, some markets saw consolidation and downsizing continue to outweigh demand. The West region recorded negative net absorption of 2.3 million square feet, led by losses in the Inland Empire (-1.8 million square feet) and Los Angeles (-1.1 million square feet).
New leasing activity totaled nearly 309 million square feet year-to-date, marginally outpacing the midyear 2024 total of 307.9 million square feet. Seven major markets exceeded 5 million square feet of new leasing in the second quarter, with Dallas/Fort Worth and Chicago each surpassing 10 million square feet. A late-quarter surge of large block deals (500,000 or more square feet) in Atlanta, Houston, Chicago, New Jersey and Dallas/Fort Worth helped lift quarterly leasing totals above the first quarter’s 151.9 million square feet.
Despite steady demand, the pace of new supply continued to exceed net absorption. More than 71.5 million square feet of new completions were delivered in the second quarter, with the South and West regions accounting for 68% of total volume. Although development activity remains elevated, completions have declined 44.6% year-over-year and are down 59% from the peak in the third quarter of 2023.
The share of build-to-suit deliveries climbed to 30.4% year-to-date, up from 16.8% one year ago, as developers adjust to evolving tenant needs and a softening demand environment. While total product under construction dipped only slightly quarter-over-quarter, the speculative share declined from 66% to 62.3%, the lowest level since the second quarter of 2020. Thirteen markets saw year-over-year declines of 50% or more in construction activity, down from 16 in the prior quarter.
The national industrial vacancy rate rose to 7.1%, up 10 basis points from the historical pre-pandemic average of 7%, as new product continued to outpace demand. Vacancy rates for smaller warehouses (under 100,000 square feet) remained low at 4.4%, although this segment also experienced an 80-basis-point year-over-year increase.
Average asking rents rose modestly, reaching $10.12 per square foot at the end of the second quarter, a 0.9% increase from the first quarter. On an annual basis, rents grew by 2.6%, though both the Northeast (-1.5%) and West (-1.9%) regions posted year-over-year declines.
Eighteen of the 83 markets tracked posted annual rent growth of 5% or more, down from 21 in the first quarter. Pricing for smaller-warehouse facilities remained elevated, averaging $13.51 a square foot, 31% above space sized over 100,000 square feet.
“Demand for logistics space remains resilient. Many companies accelerated imports to manage tariff exposure, prioritizing agility and flexibility in their supply chains. This is driving a noticeable uptick in activity beginning in June, as occupiers moved quickly during a window of lighter tariff pressure,” said Jason Tolliver, President, Logistics & Industrial Americas at Cushman & Wakefield. “Looking forward, market fundamentals are expected to strengthen, with demand gradually improving and supply falling rapidly. For tenants the next 6 to 12 months may present the best opportunity to secure favorable lease terms.”
