The U.S. industrial market closed 2025 on a stronger note, delivering its best quarterly absorption in two years and signaling renewed momentum as the sector heads into 2026.
That’s according to Newmark’s Fourth Quarter 2025 U.S. Industrial Market Conditions and Trends report released Feb. 6. The report points to broad-based leasing gains, slowing vacancy growth and steady capital markets activity as signs that the sector may be nearing a cyclical turning point.
Net absorption reached approximately 62 million square feet during the fourth quarter, marking the strongest quarterly performance in two years. Leasing activity expanded across more markets, with 44 of 53 tracked markets posting positive absorption in the fourth quarter, up from 40 in the third quarter.
Vacancy, meanwhile, rose just two basis points to 7.5%. That modest increase suggests the market is nearing peak vacancy after a period of supply-driven softening.
Demand continues to center on modern, efficient facilities as occupiers upgrade their supply chains and position themselves ahead of upcoming lease expirations. Inland logistics corridors and manufacturing hubs captured the largest share of demand, reflecting ongoing supply-chain reconfiguration and domestic manufacturing investment.
Performance still varied by region, but Newmark reported broader-based improvement compared to earlier in the year. The shift indicates that demand is no longer concentrated in just a handful of high-growth markets.
Construction activity, which has been adjusting after several years of elevated development, showed signs of stabilizing. The pipeline declined to roughly 282 million square feet in the fourth quarter and is expected to fluctuate around that level over the next year. After a brief uptick in new starts during the third quarter, development activity pulled back again in the fourth quarter.
That pattern suggests the construction contraction has likely bottomed, with new supply becoming more closely aligned with tenant demand.
Much of the larger-format space currently under construction is heavily pre-committed. Developers have been more disciplined, and tenants continue to favor build-to-suit projects and state-of-the-art speculative facilities designed to meet evolving logistics and operational needs.
Capital markets activity also remained solid. Industrial investment volume rose 12% year-over-year to $104 billion. Buyers continued to target newer, larger-format properties, encouraged by improving fundamentals and greater pricing stability.
Longer-term demand drivers remain intact. Manufacturing reshoring, supply-chain restructuring and the rapid expansion of data centers are all reinforcing industrial real estate fundamentals.
