By Corfac International
The U.S. industrial real estate market experienced major shifts over the past five years. The Covid-19 pandemic led to a huge boom in e-commerce growth, which in turn led to major demand for more industrial space. Last-mile facilities and microfulfillment centers also began to proliferate as consumer habits changed.
In 2025, the country’s industrial market is experiencing a rebalancing in the wake of surging demand and record new supply that marked the early pandemic years. New opportunities in fast-growing markets are emerging, and demand drivers are shifting. New space demand will grow the most, especially for small-bay industrial assets, according to a Q3 2025 report from the business advisory and accounting firm Plante Moran.
A new trend has the leasing market being dominated by smaller industrial users, a turnaround from the bulk leasing by large-scale users that was popular during the pandemic era. Although industrial leasing activity rose in early 2025, vacancy ticked up to 7.5 percent nationwide, with larger logistics buildings experiencing the sharpest vacancy rise, according to the Plante Moran report. Meanwhile, smaller spaces remained tight and leased quickly.
Trending small
Professionals at member firms of CORFAC International, a global alliance of independently owned commercial real estate firms have seen this new trend firsthand. “Smaller and mid-size users in the 50,000 to 150,000 square-foot [4,645 sq m to 13,935 sq m] range are absolutely the most active part of the market right now,” said Stewart Hasty, partner, industrial specialist at Piedmont Properties/CORFAC International, about his local market, Charlotte, North Carolina.
In contrast, the big-box segment has softened since the delivery surge that occurred between 2021 and 2023, Hasty said. However, mid-box users—especially regional distributors, light manufacturers, and third-party logistics companies—are continuing to drive leasing velocity.
Most of those tenants are looking for modern, efficient spaces with features such as multiple docks, plus-one drive-in, upgraded power, and moderate office finishes, with speed-to-occupancy being a top priority, according to Hasty. These tenants are also asking for shorter lease terms and more tenant improvement flexibility rather than for aggressive free rent.
The shift in leasing demand has been caused, in part, by many large national and global occupiers sitting on the sidelines, an ongoing trend over the past couple of years, Hasty said. Industry experts do not expect leasing to return to 2021/2022 levels unless more positive economic indicators occur.
Common themes
In Dallas’ industrial market, small third-party logistics (3PL) firms jumping into their first warehouse space or expanding into their second or third warehouse to expand final-mile coverage for their clients constitute a major fixture of the deals that Joe Santaularia, executive vice president and director of strategic investor relationships at Bradford Commercial Real Estate Services/CORFAC International, is working on at the moment.
“Network design is a huge part of this—how they can reach the most consumers with one-day delivery,” Santaularia said.
Some 3PLs he’s working with are considering secondary West Coast markets such as Reno, Phoenix, and Las Vegas, rather than Los Angeles. Although rates in those secondary markets are 10 percent to 25 percent cheaper, transportation costs are much higher. Meanwhile, the cost of doing business in Los Angeles is higher, but the city’s GDP is more than double that of the secondary markets combined, meaning more revenue, according to Santaularia.
The trend toward smaller users is happening outside the United States, as well. Esteban Puente Bustindui is managing partner of Blue Stone Real Estate Advisors/CORFAC International, based in San Luis Potosi, Mexico. He has seen a rise in demand from midsize and small-to-medium industrial users, some of whom are automotive and light-manufacturing suppliers. “They are looking for spaces with energy reliability, quick delivery times, and urban proximity,” Bustindui said.
Looking ahead, experts are anticipating that the recent passage of the One Big Beautiful Bill Act will spur more investment in domestic manufacturing, which should in turn help boost the U.S. industrial real estate market.
About CORFAC International
Founded in 1989, the CORFAC International network is comprised of 75 independently owned commercial real estate brokerage firms worldwide. As a network we close $10 billion in transaction volume, 10,000 sales and leases, and close and manage 750 million square feet per year. Our global footprint includes offices in the United States, Belgium, Canada, Chile, Costa Rica, Dominican, Republic, England, Germany, Ireland, Italy, Japan, Kazakhstan, Mexico, Netherlands, Poland, Romania, Russia, Scotland, South Korea, Switzerland and United Arab Emirates. Our global network of intentionally independent, full-service commercial real estate firms offer market-leading expertise in office, industrial and retail brokerage, investment sales, tenant and landlord representation, multifamily, property management, advisory services and more.
