The macroeconomic uncertainty created by the war in Iran, tariff policies and high interest rates has seeped into every corner of U.S. commercial real estate — including the industrial market in the Boston area.

Landlords in the region have been struggling to bring down the stubbornly high vacancy in the once-tight industrial market. CBRE pegged the Greater Boston industrial vacancy rate last quarter at 7.9%, the same level as the prior quarter and more than four times the pandemic-era low point of 1.9%.

While the region isn't among the country's largest industrial markets, it has 314M SF of inventory, meaning more than 24M SF is now sitting vacant. And the vacancy rate is especially high in the region's distribution and logistics sector: 16.5%.

That vacant space is weighing on landlords' balance sheets, and to fill it up, they say they need to see more tenants willing to make long-term commitments.

"If there's a little less geopolitical volatility, we might be able to have decision-making further out, get some more long-term absorption on the books, and we'll be able to eat up that space and take care of those obsolete buildings," EQT Investment and Leasing Officer Erin Harvey said Thursday at Bisnow's Greater Boston Industrial and Manufacturing event.

A global real estate investor with a 470M SF portfolio, EQT regularly discusses the day-to-day economic fluctuations that impact its properties, Harvey said — from President Donald Trump implementing 50% tariffs on many construction materials coming from Canada to 10-year Treasury bond yields clearing 5% for the first time in years.

"On our last call, we were actually talking a lot about the tariffs and whether or not the tariff situation is actually going to happen with Canada and the U.S.," she said onstage at the Westin Copley Place. "Then I woke up two days ago and now we're talking about the bond market, we're talking about Treasurys. So you just never know what's going to be next."

Longpoint Realty Partners founding partner Nilesh Bubna said geopolitical volatility and high interest rates have impacted not only investment decisions for firms like his but also leasing decisions for the tenants they court.

"Where they can, they're asking for shorter-term decision-making," he said, adding that most are unwilling to sign 10-year deals.

"The broader ask from the tenant base is, 'Can we do an 18-month push? Can we do a two-year push?'"

Arco National Construction President Jason Grant said he has seen activity in the industrial market remain slow, as tenants don't feel enough certainty to commit long-term.

"With the geopolitical concerns, the tariffs, it just feels like every tenant has a reason not to make a decision right now," he said.

Much of the vacancy in the market has come from speculative projects that started work when the market was hotter but delivered into an environment in which tenants aren't moving. Rhino Capital Managing Principal Michael Olson said the market has struggled with a "force of inertia" in which tenants are hesitant to make moves, and it hasn't captured the type of new demand needed to bring down the vacancy rate.

"There hasn’t been a lot of organic growth," he said. "It’s been more a game of musical chairs, and landlords are very focused on keeping occupancy at all costs."

One exception to that was shipping giant Maersk, which in July signed the region's largest industrial lease in years, taking 617K SF at a GFI Partners property in Hopedale. That contributed to 2M SF of leasing activity in the region last quarter, the second-best three-month period in nearly four years, according to Cushman & Wakefield.

But the brokerage still reported that the region's net absorption last quarter was negative, pushing its vacancy rate up 50 basis points.

NAI Parsons Commercial Group Assistant Managing Director Garrett Quinn said the leasing activity so far this year has been a good sign, but the market isn't out of the woods yet.

"I'll feel more comfortable when I see more positive absorption and when tenants are starting to make longer-term commitments," he said.

Calare Properties Vice President Tim Collis said the fact that vacancy stayed flat last quarter, rather than continuing to tick up, is a positive sign.

"That speaks to a lot of the Class-A supply starting to get taken down," he said. "It's taken a lot of time for tenants to digest these spaces."