Demand for industrial properties rose in the third quarter, signaling renewed momentum and “the market getting closer to balance,” according to a report by real estate firm Colliers, released this week.
The company’s third-quarter US Industrial Market Statistics report forecasts a stabilizing industrial landscape that is poised for growth, characterized by stronger demand and slower development.
Net absorption of industrial space, a key measure of demand, rose to 60 million square feet in the third quarter — the highest level since early 2023 and roughly in line with new supply. Despite the gains, year-to-date net absorption remains below year-ago levels at 118 million square feet compared to 123 million square feet in 2024.
Vacancy rates rose four basis points in the third quarter to 7.4%, the smallest increase since the fourth quarter of 2022. Vacancy rates are nearing their cyclical peaks and are expected to stabilize as demand grows and new supply remains limited, researchers said. The third quarter saw 65 million square feet of new supply enter the market, the lowest level since the first quarter of 2019 and a fraction of what was delivered during the height of the recent building boom. New supply exceeded 100 million square feet for nine consecutive quarters between mid-2022 and mid-2024, according to the report.
The report also tracked the construction pipeline slowdown. Industrial space under construction fell 19% year-on-year, to 270 million square feet, the lowest level since 2018 and a 62% decline from the 2022 peak of 711 million square feet.
