Regional Rent Divide Emerges As Industrial Leasing Slows Down Nationwide
Industrial occupiers are slowly forging ahead through the macroeconomic fog, new data suggests.
Leasing velocity slowed in the industrial sector in the third quarter, but the national vacancy rate remained flat quarter-over-quarter for the first time since 2022, according to Cushman & Wakefield.
Asking rents, at $10.10 per SF, were flat quarter-over-quarter and up 1.7% annually. Rents slipped by at least 3% in the West and Northeast while rising nearly 5% in the South and 2.5% in the Midwest.
New leasing totaled 158M SF in the third quarter, a 7.1% decline from the second quarter and 3.2% off the same period last year.
The 7.1% national vacancy rate is still 10% higher than a year ago and nearly 60% above prepandemic occupancy levels, owing in large part to a deluge of construction that was kicked off by pandemic-era lockdowns.
But the wave of warehouse development has crested, with the 63.6M SF in third-quarter completions down nearly 15% from the prior quarter and 33% compared to last year. The decline in new deliveries has helped boost absorption, the net increase in occupied space after accounting for move-ins and move-outs.
Absorption tallied 45M SF in the third quarter, pushing the year-to-date volume to 108M SF and nearly in line with 2024 trends. Industrial owners are experiencing the same bifurcation that is happening across the office sector and driving tenants to the highest-quality buildings.
“We continue to see modern facilities outshine older product,” Jason Price, Cushman senior director and Americas head of logistics and industrial research, said in a statement. “Nearly 69 million square feet of space in buildings delivered since 2020 was absorbed during the third quarter, while facilities built before 2010 actually gave back about 17 million square feet.”
There is still more newly built space to fill. Speculative development accounted for 71% of the 73M SF of industrial space that delivered in the first quarter, and 45M SF of that spec space came online vacant, according to an earlier Cushman & Wakefield report.
The sector is on the front lines of some of President Donald Trump’s key policy planks. Tariffs are weighing on industrial leasing, and the massive warehouse and distribution center deals that buoyed the sector during the pandemic have largely dried up. Just 13 industrial leases over 1M SF were signed in the first half of 2025, less than half as many as were signed over the same period last year.
Industrial developers and occupiers are also being forced to plan around the administration’s stepped-up immigration enforcement. Prologis CEO Hamid Moghadam said on Bloomberg TV in July that aggressive immigration enforcement could cause construction costs to “go up radically.”
An August raid of a Prologis-owned bonded warehouse in New Jersey led to 29 arrests, and a high-profile raid of a $4B battery plant construction site in Georgia has raised questions about the reliability of foreign capital commitments.
