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Industrial demand fell sharply in 2025, reinforcing tenant-favorability, but momentum could return with policy clarity and consumer strength.
In our quarterly State of the U.S. Industrial Market, Savills Research presents key insights on industrial real estate supply, demand and pricing. The report also includes analysis of broader economic conditions and demand drivers such as ports, e-commerce, manufacturing and the potential implications of recent federal legislation.
A few noteworthy facts from our research:
- Trade policy shifts delay tenant moves
Shifting trade policies are delaying leasing decisions, leading to short-term renewals and outsourcing; activity may rebound with clearer tariff direction. - Net absorption falls to 13-year low
Occupancy gains have slowed sharply in 2025, with positive absorption driven by Class A space, while Class B and C buildings continue to lose tenants. - Rent declines spread, but unevenly
Over 40% of markets have now seen average asking rents fall 5% or more from recent peaks, though declines vary by location, segment and ownership profile. - Select pockets exhibit resilience
Dallas and Houston report year-over-year vacancy declines, bucking national trends, while buildings over 750,000 square feet show the most stable rates. - Tax bill provisions support onshoring
Bonus depreciation and other provisions could boost manufacturing investment, especially in chips and defense, but clean tech likely to stall as incentives are cut.