Industrial Real Estate Vacancy Plateaus at 7.1% as Leasing Hits 941M SF, CBRE and Cushman Data Show

The U.S. industrial real estate market recorded 941 million square feet of leasing activity in 2025 — the second-highest annual total ever — while vacancy held flat at 7.1% for two consecutive quarters, according to Q4 2025 data from CBRE and Cushman & Wakefield cited in a market commentary published March 19 by CRG, a commercial real estate development and investment firm.

The figures suggest the industrial sector may be approaching a turning point after more than two years of rising vacancy, as accelerating demand collides with a sharply contracting construction pipeline.

Leasing and Absorption Accelerate in Industrial Real Estate

CBRE reported that Q4 2025 leasing volume reached 226 million square feet, an all-time record and a 22% increase year-over-year. Full-year net absorption came in at 176.8 million square feet, up 16.3% from 2024, while Q4 alone posted 54.5 million square feet of net absorption — a 29% jump compared to the same quarter the prior year.

Cushman & Wakefield tracked 43 leases exceeding one million square feet in 2025, a 30% increase from 2024, and 146 leases for warehouses over 500,000 square feet — up 31% year-over-year and the highest total since 2022.

Jason Tolliver, President of Logistics & Industrial Americas at Cushman & Wakefield, was quoted in the CRG commentary: "The market is stabilizing and rebounding much faster than anybody really anticipated."

Geographically, the Dallas-Fort Worth metro led the nation with 31 million square feet of absorption in 2025. Indianapolis, Kansas City, and Greenville-Spartanburg also posted figures meaningfully stronger than 2024, according to the commentary.

Among the demand drivers cited: third-party logistics providers expanding fulfillment capacity, manufacturers reshoring production, and companies supplying the data-center construction supply chain — including electrical systems, power racks, and hardware.

Warehouse Real Estate Supply Pipeline Contracts Sharply

On the supply side, Cushman & Wakefield data showed total industrial deliveries in 2025 came in at 281 million square feet — down 35% from 2024 and the lowest annual figure since 2017. Q4 2025 deliveries of 65.7 million square feet represented a 24% year-over-year decline.

Prologis, described in the commentary as the largest industrial REIT in the world, reported that replacement-cost rents sit approximately 20% above current market rents, making speculative development economically difficult in many markets. As a result, build-to-suit projects now represent 40% of the under-construction pipeline, up from historical norms in the mid-20s, according to the CRG commentary.

Colliers is forecasting that the U.S. industrial construction pipeline will hit bottom in 2026. Prologis projects that 2026 global completions will be the lowest since 2018.

Shawn Clark, Chief Executive Officer of CRG, stated in the commentary: "The lines are crossing. Absorption is trending up while deliveries are trending down. By 2026, I expect demand to exceed new supply for the first time since 2021 — and that crossover is the catalyst for everything that follows."

Industrial Vacancy Stabilizes; Big-Box Segment Shows Improvement

The national industrial vacancy rate stood at 7.1% at the end of Q4 2025 according to Cushman & Wakefield, unchanged from Q3. CBRE's measure, which uses a different methodology, placed vacancy at 6.7%. The year-over-year increase in vacancy as of Q4 2025 was 50 basis points — the smallest incremental move since late 2022.

Big-box warehouse real estate showed a notable improvement. Vacancy among warehouses over 500,000 square feet peaked at nearly 11% in Q4 2024 — up from a pandemic-era low of 3.3% in Q2 2022 — before declining to 9.5% by Q4 2025.

James Breeze, Head of Industrial Research for the Americas at CBRE, noted in the commentary that lease expirations from the 2020–2022 period are pulling forward demand: "We're starting to get closer to more larger tenants having to make decisions based on their portfolio, what they leased from 2020 to 2022."

Tolliver added: "A lot of this space that was on the market, which put downward pressure on rental rates, is getting absorbed very quickly."

Cushman & Wakefield's forecast calls for vacancy to stabilize through 2026 and begin tightening in 2027.

Quality Divide Shapes Industrial Real Estate Outlook

The CRG commentary noted that performance is bifurcating along asset-quality lines. Modern buildings with 36-foot-plus clear heights, robust power infrastructure, and efficient column spacing are outperforming older vintage assets, according to the firm. Small-bay industrial facilities are operating at sub-5% vacancy with limited new competitive supply, the commentary stated.

First Industrial Realty Trust reported 32% cash rental rate increases on new and renewal leasing and maintained 94.4% occupancy through the cycle, per the commentary.

Nationally, industrial rents have risen 53% over the past five years according to Cushman & Wakefield, with the average asking rent now at $10.18 per square foot — up 1.5% year-over-year.

Clark stated: "This is a market that rewards selectivity. Modern, well-located assets in markets with strong demand drivers will tighten faster and reprice more aggressively than the broader averages suggest."

The CRG commentary noted that construction financing remains tight enough to keep new starts limited well into 2028. The firm identified three metrics to monitor going forward: the absorption-delivery crossover, construction financing availability, and mark-to-market rent growth in existing portfolios.