By Steven Llorens
If there’s one thing I’ve learned after 15+ years in commercial real estate (CRE), it’s that industrial properties have a rhythm of their own. They march to the beat of global supply chains, technological advancements, and investor sentiment. Today, I want to talk to you about the current industrial market landscape — because whether you’re buying, selling, or leasing, understanding today’s conditions is your first move toward success.
Let’s dive in.
Industrial Properties Are Still the Darlings of CRE But It’s Changing
Not long ago, industrial properties, especially warehouses and distribution centers, were the hottest ticket in town. The pandemic accelerated e-commerce, causing massive demand spikes. Vacancy rates plummeted, rents soared, and cap rates compressed to historic lows.
Now? We’re seeing a normalization phase. According to CBRE’s 2024 U.S. Real Estate Market Outlook, vacancy rates for industrial spaces are ticking slightly upward as new supplies hit the market. But don’t panic, this isn’t a crash. It’s a healthy rebalancing after a meteoric rise.
Pro tip:
If you’re an owner, don’t assume you can name your price anymore. If you’re a tenant, you might find some negotiation leverage you didn’t have two years ago.
I always tell my clients that just because industrial properties have been the golden child doesn’t mean they’re invincible. Markets evolve and the smartest players evolve with them.
Right now, I tell prospective buyers and tenants to stop chasing yesterday’s headlines and start analyzing today’s fundamentals. If you’re investing in or leasing industrial space, focus less on the hype and more on the submarket data: vacancy trends, rental growth rates, tenant demand profiles.
Remember, the opportunity isn’t gone, it’s just different. Winners in this market are the ones who adjust their expectations early, stay flexible, and negotiate smartly.
Supply is Catching Up Finally
After years of underbuilding, developers went into overdrive between 2021 and 2023. Now, many of those projects are reaching completion. That’s leading to a temporary oversupply in some markets, especially in big logistics hubs like Dallas-Fort Worth, Atlanta, and Chicago.
According to JLL’s Industrial Construction Report they estimate that around 400 million square feet of new industrial product came online in 2024 alone!
Pro tip: Investors and tenants need to watch local markets closely. Some areas will absorb the new supply easily. Others may see softer rents and longer lease-up times.
One thing I’ve learned after years in this business timing matters just as much as location. Right now, with so much new industrial supply coming online, I tell my clients to be extra careful about where and what they’re buying or leasing.
Not every shiny new building will be a winner. Some markets will absorb new inventory easily; others will struggle.
My rule of thumb: Always dig into the absorption rates, tenant demand, and how well a market handled previous supply waves. If the fundamentals are shaky, even a brand-new property can turn into a long, expensive vacancy. Patience and precision are your best friends in a supply-heavy cycle.
Investors Are Adjusting to New Realities
Rising interest rates have shaken the investment game. Institutional buyers are more cautious, and cash flow is king again. Cap rates for industrial assets are expanding after years of compression, meaning property values are softening slightly.
But here’s the good news: Industrial real estate fundamentals remain strong. E-commerce, reshoring, and nearshoring are long-term trends, not fads.
NAIOP’s 2025 Industrial Market Report makes it clear: demand for modern logistics facilities, cold storage, and manufacturing space isn’t going away anytime soon.
Pro tip: Think long-term. If you’re buying, focus on quality locations and flexible designs that can serve multiple tenant types. If you’re selling, price realistically, buyers are savvy, and underwriting is stricter.
I always remind my clients and partners: the numbers don’t lie but they do change.
With higher interest rates and cap rates expanding, the investment game isn’t about chasing ‘cheap money’ anymore. It’s about solid fundamentals and smart underwriting.
When I’m advising new investors, I tell them: stop focusing only on price tags. Focus on cash flow, tenant quality, lease terms, and property flexibility.
The deals that win in today’s market aren’t necessarily the flashiest, they’re the ones that perform steadily, even when the market gets bumpy.
Play the long game, and you’ll outlast the noise
Hot Niches to Watch
If you want to get ahead of the curve, here are some industrial niches heating up:
- Cold storage: Grocery delivery and food production are driving demand.
- Small-bay industrial: Properties under 100,000 square feet for last-mile delivery or light manufacturing.
- Nearshoring hubs: Think border cities like El Paso, Laredo, and San Diego, as U.S. companies rethink global supply chains.
Keep an eye on how technologies like AI and automation are influencing facility design too a smarter warehouse is quickly becoming the norm, not the exception (Prologis’ Innovation Report,2025).
Pro tip: Specialization matters more than ever. Consider how you can position yourself (or your properties) to tap into these specific growth areas.
Final Thoughts: Navigate with Strategy, Not Emotion
Markets shift. That’s not new. What’s critical is how you respond to those shifts. Industrial real estate continues to offer incredible opportunities, but the days of “anything sells at any price” are over (for now).
Remember:
- Stay data-driven
In this business, I’ve learned that instincts can open the door, but data closes the deal. When I talk to clients, I always stress: don’t guess where the market is headed know it. Track vacancy rates, rental comps, absorption rates, and cap rate movements constantly.
The investors and operators who win are the ones making decisions based on facts, not feelings. Stay disciplined, stay curious, and let the numbers guide your next move.
- Understand your submarket intimately.
Focus your attention not just on the city, but the street, the block, the competition. What’s happening in your backyard matters way more than national trends.
- Adapt your strategies based on current realities, not last year’s headlines.
Markets shift fast. What worked 18 months ago might hurt you today if you’re not adjusting your strategy. In this business, success belongs to those who stay sharp, stay curious, and stay flexible
If you’d like personalized insights into your market or portfolio, don’t hesitate to reach out. I’m here to help you navigate the path forward with clarity and confidence.
Stay smart out there!
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