JLL’s 2025 U.S. Industrial Tenant Demand Study reveals that while occupier decision-making timelines are lengthening, demand from 3PL, logistics, and distribution companies has increased 13% year-over-year.
Occupiers are exercising greater caution with long-term commitments, favoring short-term renewals as they evaluate supply chain impacts on their space requirements amid tariff uncertainties. Decision timelines have extended from 3.5 to 11 months, while companies increasing inventory holdings in anticipation of potential tariffs are further complicating real estate planning strategies.
Meanwhile, manufacturing-related demand is positioned for significant growth, with its share of U.S. industrial demand projected to reach 30% by 2028.
According to JLL’s report, U.S. industrial demand has declined 10.9% year-over-year as occupiers extend their decision-making processes. Companies are hesitant about long-term commitments, resulting in more short-term renewals as they evaluate how evolving global supply-chain strategies might impact their space requirements.
A key driver behind this shift is that organizations now prioritize efficiency and cost control, with supply chain resilience becoming the decisive factor in real estate decisions.
“There’s significant pent-up demand in the market. This stems from companies actively seeking modern facilities to replace aging assets while simultaneously planning consolidation strategies,” said Craig Meyer, President of Industrial Brokerage, JLL. “The decision cycles now extend to 12-14 months as executives hesitate to make substantial investments in today’s uncertain economic climate, especially given the limited supply of suitable properties. Once market conditions stabilize, we expect this accumulated demand to translate into substantial activity.”
JLL’s report also indicates that current market uncertainties are accelerating manufacturing demand growth. While manufacturing currently accounts for 19.2% of total industrial demand, it is projected to capture 30% of U.S. industrial demand by 2028, driven by companies establishing domestic production facilities to reduce supply chain risk.
This strategic shift underscores how reshoring and regionalization initiatives are transforming global supply chain networks, with proximity to customers becoming increasingly important. Additionally, warehouse and distribution continues to show robust performance, currently representing 80.8% of market share, highlighting the diversity of growth opportunities across the industrial sector.
Notably, JLL’s research found that 3PL, Logistics & Distribution companies are currently driving the majority of market demand. Logistics providers have boosted their market activity by 12.8% compared to last year. 3PLs are growing by positioning themselves as flexible partners in managing supply chain disruptions and navigating complex tariff environments, with companies increasingly preferring their expertise over internal solutions.
“The market is witnessing opposing trends among 3PLs and traditional retailers”, said Mehtab Randhawa, Global Lead for Industrial Research, JLL. “While 3PL, logistics and distribution continue to dominate demand, the traditional retail ecommerce sector is contracting under multiple pressures. This contrast indicates how today’s trade uncertainties and changing environment are fundamentally reshaping the industrial real estate landscape.”
At the same time, traditional retailers have significantly scaled back their industrial requirements, with demand dropping 16.7% year-over-year, according to JLL’s report. This shift stems from a complex mix of factors including new tariff implementations, escalating product costs, ongoing supply chain disruptions and inventory management complications.
Despite current hesitations, JLL’s analysis points to substantial accumulated industrial demand that remains sidelined but ready to enter the market. This deferred activity reflects a strategic pause rather than declining interest, as companies continue refining their facility requirements for the coming years. The measured approach to commitments suggests a market recalibration that will likely result in more sustainable, thoughtful expansion once economic conditions stabilize.
“Our data reveals substantial latent demand that’s building across multiple sectors,” says Randhawa. “The extended timeframes we’re seeing in decision-making reflect strategic evaluation rather than disinterest. Companies are carefully weighing their long-term facility needs against evolving supply chain requirements. We anticipate this accumulated demand will materialize into significant leasing activity once economic clarity emerges, particularly as suitable industrial space remains constrained in key markets.”
