TAG Industrial Watch: July 19, 2025
At the start of 2025, the general consensus among industrial real estate analysts expected a rebound in demand. Instead, as TAG predicted, industrial demand contracted into negative territory for the first time since the aftermath of the Great Recession. At -8.1 million square feet, national net absorption dropped to the lowest level since Q3 2009 (CoStar, top 50 metros, classes A, B, & C, minimum 10,000 square feet). With net deliveries adding 64.6 million square feet to the inventory, the national vacancy rate rose about 40 basis points on the quarter to 7.6 percent, matching the highest level since Q2 2013. For the first time since Q4 2010, the average market rent across the nation fell quarter-over-quarter, slipping two cents to about $11.70 per square foot. While annual rent growth was still up 1.9%, the pace decelerated by 110 basis points on the quarter, projecting negative rent growth by the end of the year. While industrial space under construction continued to slow to 305.4 million square feet, the pipeline is still at 2019 levels and well above contracting demand. Despite the disappointing report card, industrial investors can rest assured that new opportunities continue to develop among small industrial and specialized properties, just as TAG predicted.
I N D U S T R I A L N E W S
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9 News – July 16, 2025
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