Amid a landscape marked by geopolitical shifts, evolving trade policies and economic uncertainty, the industrial commercial real estate sector is undergoing significant transformation. New research from Prologis introduces the Leasing Driver Dimensions framework, a tool designed to help stakeholders understand the complex and varied motivations behind leasing decisions in logistics real estate. This framework identifies five core drivers—top-line growth, inventory resilience, production location repositioning, the service imperative, and the efficiency mandate—that collectively shape the sector’s trajectory in both the near and long term.
In the short term, the sector is grappling with heightened uncertainty. Companies are split in their responses, as some are pausing major decisions, while others are pushing forward with growth and resilience strategies. Ongoing changes heavily influence the immediate outlook for 2025 in trade policies and macroeconomic concerns. Many businesses are investing in logistics space to support demographic expansion, catch up on previously postponed plans, and manage increased inventory needs resulting from trade disruptions. Flexibility has become paramount, with firms relying more on third-party logistics providers and existing warehousing to maintain supply chain resilience in the face of volatile conditions.
One notable trend is the shift in manufacturing locations. High-value industries, such as semiconductors, pharmaceuticals and the automotive sector, are accelerating their shift toward near-shoring and domestic production to mitigate geopolitical risks. This is leading to increased demand for logistics space in regions like Texas, Chicago and the Southeast, where manufacturing’s share of new leasing has grown significantly. Meanwhile, sectors with lower value and higher price sensitivity are diversifying production across East and Southeast Asia but continue to depend on established U.S. logistics gateways.
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Inventory management strategies are also evolving. The threat of tariffs and trade disruptions has prompted companies to front-load inventories, leading to higher utilization rates in logistics facilities and a greater reliance on third-party providers to handle fluctuations. This approach helps businesses buffer against cyclical demand swings and maintain service levels despite external shocks. While these patterns are currently driven by short-term uncertainty, they are likely to become embedded in long-term supply chain strategies as companies seek to avoid stockouts and manage transportation costs more effectively.
Looking further ahead, the sector’s long-term prospects remain robust, underpinned by structural trends such as the continued rise of e-commerce, demographic-driven consumption growth, and the increasing importance of urban logistics. E-commerce alone is expected to require an additional 50 to 75 million square feet of logistics space annually in the U.S. by 2030. These secular forces are expected to drive sustained demand for modern, efficient logistics facilities, even as cyclical pressures fluctuate.
The push for efficiency and modernization is reshaping what tenants expect from industrial properties. Companies are investing in automation, advanced inventory systems and energy-efficient buildings to improve productivity and meet corporate sustainability goals. The demand for facilities that support these initiatives—such as LEED-certified warehouses and those with robust power infrastructure—is rising, particularly among multinational firms with strict emissions targets. Access to a skilled workforce and reliable utilities is becoming a decisive factor in location choices, and constraints in these areas could limit future supply.
While uncertainty is causing many companies to delay leasing decisions, this is building a pipeline of pent-up demand that could quickly alter market dynamics once clarity returns. The research suggests that, despite short-term headwinds, the long-term direction of the sector is shaped more by enduring structural changes than by immediate economic cycles.
Stakeholders who focus on these underlying trends—rather than reacting solely to short-term volatility—will be best positioned to navigate risks and capitalize on emerging opportunities in the evolving industrial and commercial real estate landscape.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
