**U.S. Industrial Real Estate Adapts to Market Shifts as Vacancy Climbs to 11-Year High**
The U.S. industrial real estate market recorded a net absorption of 29.6 million square feet in the second quarter of 2025, closely matching the 30.3 million square feet absorbed in the first quarter and surpassing industry expectations, according to Cushman & Wakefield. However, despite steady absorption activity, the national vacancy rate has risen to 7.1%, a 15% increase year-over-year and the highest level seen since 2014.
A significant contributor to absorption in Q2 was newly completed warehouse space, with more than 50 million square feet of new inventory fueling demand for higher-quality, modern facilities. This trend signals that occupiers are prioritizing upgraded logistics infrastructure.
Market dynamics varied regionally. While some areas experienced gains, the West region posted negative net absorption of 2.3 million square feet, stemming largely from declines in the Inland Empire and the Los Angeles markets. These losses were attributed to ongoing consolidation and downsizing that, in some instances, outweighed tenant demand.
“Large occupiers remain active, with a continued flight to quality driving demand for modern logistics space,” noted Jason Price, Senior Director and Americas Head of Logistics & Industrial Research at Cushman & Wakefield. “While absorption is still below historical norms, second-quarter leasing activity and the strength of newer product show that the industrial sector is adapting to shifting market forces.”
Despite a higher vacancy rate, the data reflects a sector resiliently adjusting to ongoing economic and operational changes, with developers and occupiers alike aligning to longer-term trends in quality and efficiency.
