Mid-Sized Deals Lead Industrial Sector Into Stable Territory

The U.S. industrial real estate market is finding its footing in 2025, with leasing demand showing a shift toward stability—driven largely by mid-sized tenants and a steady rise in manufacturing-related activity.

While larger deals remain rare and macroeconomic risks persist, the sector continues to demonstrate resilience, backed by strong investor interest and a long-term outlook that emphasizes durability over volatility.

In a recent CBRE webinar, industry leaders Will Pike and John Morris highlighted the industrial sector’s current landscape—one shaped more by gradual shifts than dramatic turns. The takeaway: stability is the new strength.

Mid-Sized Leasing Leads the Way

So far, 2025 has been a story of measured progress. According to Morris, demand remains strongest in the mid-size range—specifically leases between 50,000 and 100,000 square feet. Larger users, by contrast, have remained largely inactive for more than two years.

“The biggest users are quiet,” Morris noted, pointing out that the return of million-square-foot transactions likely depends on improvements in broader economic indicators.

For now, the market’s momentum rests on the consistency of mid-sized activity rather than headline-grabbing mega-deals. Morris anticipates a slowdown through late 2025 and into the first half of 2026, but sees potential for renewed leasing highs—likely four or more quarters out—once sentiment improves.

Investment Remains Strong Despite Headwinds

On the investment side, Pike observed that industrial assets continue to attract significant capital, even after a brief post-pandemic lull. Confidence has rebounded, buoyed by greater clarity in trade policy and a return to more normalized buyer-seller dynamics.

Some localized challenges remain—particularly in softening port markets—but strong demand in regions like South Florida reflects broader confidence.

“We’re seeing capital market activity at all-time highs in certain pockets,” Pike said, adding that the sector’s overall strength has weathered recent uncertainty well.

Manufacturing Fuels Quiet Growth

One key driver behind recent leasing momentum is manufacturing. Morris reported a 50% increase in manufacturing-related leasing year-over-year, with regional operators expanding from facilities around 60,000 square feet to over 100,000.

This growth is driven more by light assembly and regional distribution than by large-scale cross-border production. Despite unresolved questions around U.S.–Mexico–Canada trade policy, mid-market manufacturers remain optimistic, with expectations of larger investments once trade clarity improves.

A Market Defined by Stability

Both executives emphasized that industrial real estate’s current pace is a healthy shift from the frenzied post-pandemic years.

“It’s a little bit less exciting—and that’s a good thing,” Morris said, citing the abundance of core capital still targeting the sector.

Industrial has emerged as the performance benchmark among institutional asset classes, particularly for investors comfortable taking on leasing risk in tertiary markets or targeting Core Plus and value-add strategies.

“Some of the best opportunities for outsized returns now lie in markets with slower leasing velocity,” Pike added. “In these areas, patient, selective investors may find attractive yields as leasing cycles turn in their favor.”

Source: GlobeSt