Companies Delay Industrial Leasing Decisions Amid Economic Uncertainty But Prepare For Future Expansion

As global economic conditions remain volatile—shaped by geopolitical tensions, shifting trade policies, and market uncertainty—the industrial commercial real estate sector is undergoing notable changes.

Prologis has introduced the Leasing Driver Dimensions framework, aimed at helping industry players better understand the multifaceted factors influencing leasing in logistics real estate. The model highlights five key drivers: top-line growth, inventory resilience, production location shifts, the service imperative, and the efficiency mandate.

Short-Term Slowdown, Long-Term Strategy

Uncertainty is prompting a split in company strategies. Some businesses are delaying leasing decisions, while others continue to expand and invest in resilience. Trade disruptions and economic unpredictability are shaping near-term decisions through 2025. Companies are increasingly turning to flexible solutions—like third-party logistics providers and adaptive warehouse use—to maintain supply chain continuity.

Manufacturing Moves Closer to Home

Industries such as semiconductors, pharmaceuticals, and automotive are accelerating nearshoring and domestic manufacturing to reduce geopolitical risk. This shift is boosting demand for logistics facilities in regions like Texas, Chicago, and the Southeast. Meanwhile, cost-sensitive sectors continue to diversify production across East and Southeast Asia but still rely on traditional U.S. logistics hubs.

Inventory and Supply Chain Adaptation

Firms are rethinking inventory management in response to potential tariffs and supply disruptions. By front-loading stock and relying on third-party logistics, companies aim to cushion against demand swings and avoid stockouts. These strategies, though shaped by current volatility, are becoming central to long-term planning.

Structural Trends Drive Long-Term Demand

Despite near-term headwinds, the sector’s long-term outlook remains strong, fueled by structural shifts including e-commerce growth, demographic expansion, and the rise of urban logistics. E-commerce alone could require an additional 50 to 75 million square feet of logistics space annually in the U.S. by 2030.

Modernization and Efficiency Take Center Stage

To meet rising expectations, companies are investing in automated systems, energy-efficient buildings, and advanced inventory technologies. Demand is growing for LEED-certified facilities and those with strong energy infrastructure—especially from multinationals focused on sustainability. Access to skilled labor and reliable utilities is also influencing location decisions and could constrain future supply.

Conclusion: A Delayed Surge in Demand

While many companies are in a holding pattern, this is creating a buildup of latent demand that may rapidly reshape the market once conditions stabilize. Long-term growth is being driven more by fundamental, structural trends than by short-term cycles. Those who focus on these enduring shifts will be best positioned to navigate uncertainty and seize emerging opportunities in industrial real estate.

Source: GlobeSt.