November 2025 Industrial Report: Smaller-Scale Industrial Properties Prove Resilient

Key Takeaways:

• Construction of industrial facilities smaller than 100,000 square feet is up 16% year-over-year (Y-o-Y), while larger facilities are down more than half in the same period.
• National average in-place rents rested at $8.73 per square foot at the end of October, up 5.7% annually. Lease spreads also continued shrinking across several markets. 
• The national vacancy rate for industrial space stood at 9.6% in October, spiking by 240 basis points (bps) annually due to ripple effects of the substantial deliveries in recent years. 
• Currently, 352.9 million square feet of industrial space is under construction nationally, which is equivalent to 1.7% of current stock. 
• So far this year, $61.8 billion has changed hands in industrial transactions for an average of $136 per square foot. Recent interest rate cuts and the end-of-year scramble to close deals may contribute to a strong finish in 2025 in terms of sales. 
• Western markets: After a period of protracted growth, rent appreciation is hitting the brakes with six out of nine markets notching rent growth below the national average. 
• Midwestern markets: Industrial construction activity is beginning to pick up, with developers looking to capitalize on recent interest rate cuts and comparatively affordable labor and material costs. 
• Southern markets: Regional industrial expansion continues, with Baltimore as the only Southern market with a declining pipeline year-over-year. 
• Northeastern markets: Vacancies remain elevated in New Jersey and Boston, whereas lease spreads in Bridgeport lost some steam.