TAG Industrial Watch: December 13, 2025

The industrial real estate market continues to look for stabilization, with demand gradually catching up to supply as industrial space under construction has dropped 62% since 2022 (GlobeSt). However, the sector still faces headwinds and uneven demand, meaning recovery won’t be the same across all property types and regions. Smaller industrial buildings below 50,000 square feet continue to outperform their big-box counterparts that have seen the bulk of new construction in recent years. While vacancy rates may continue to grow, this divergence continues to catch the eye of investors as more attention shifts to small and mid-size industrial assets. Industrial landlords are also faced with more competition to attract tenants, leading some to consider shorter-term lease extensions and incentive packages that had become less common during the peak of leasing activity.