Demand for industrial real estate surged in the third quarter, signaling renewed momentum and “a market approaching equilibrium,” according to a report from real estate firm Colliers, released this week.
The company’s Q3 U.S. Industrial Market Statistics report forecasts a stabilizing industrial landscape that is poised for growth, marked by stronger demand and slowing development.
Net absorption of industrial space, a key measure of demand, climbed to 60 million square feet in Q3—the highest level since early 2023 and nearly matching new supply. Despite the gain, year-to-date net absorption remained below year-ago levels at 118 million square feet compared to 123 million square feet in 2024.
Vacancy inched up four basis points in Q3 to 7.4%, the smallest increase since the fourth quarter of 2022. The researchers said vacancy rates are nearing their cyclical peak and are expected to stabilize as demand grows and new supply remains limited. 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 being delivered during the height of the recent construction boom. New supply surpassed 100 million square feet for nine straight quarters between mid-2022 and mid-2024, according to the report.
The report also tracked a slowing construction pipeline. Industrial space under construction fell 19% year-over-year, reaching 270 million square feet—the lowest level since 2018 and a 62% decrease from the 2022 peak of 711 million square feet.
