The U.S. industrial sector regained momentum in the third quarter, with absorption improving and vacancy increasing only six basis points, signaling a market close to stabilization. New leasing activity strengthened, particularly in larger facilities. While many tenants continue to focus on portfolio efficiency and renewals, the steady increases in new commitments observed year to date suggests confidence in long-term space needs. Performance varies across regions - inland logistics hubs are seeing the strongest gains, while select coastal markets continue to recalibrate.
Development activity continues to moderate as the pipeline declined for the 12th consecutive quarter. The share of speculative projects has shifted dramatically as developers and occupiers turn toward build-to-suit and owner-built projects. At the same time, capital markets activity improved as users and private buyers capitalized on pricing stability and strategic opportunities. The generational wave of manufacturing-related investment and infrastructure expansion continues to reinforce the sector’s long-term demand outlook. Overall, the industrial real estate market is positioned for a gradual but sustained recovery.
Key Takeaways:
- Net absorption reached about 36 million square feet in the third quarter, marking the strongest performance since 2023.
- Vacancy rose only 6 basis points to 7.5 percent, indicating that market vacancy may be nearing its peak.
- The construction pipeline contracted for a twelfth straight quarter to roughly 290 million square feet, the lowest level since 2018.
- Speculative development declined to around 75 percent of new starts as build-to-suit and owner-occupied projects increased.
- Industrial investment volume rose 11 percent year-over-year, with users representing nearly 10 percent of total acquisitions.
