Industrial property deal flow has remained stable during the first half of 2025, with transaction counts on par with pre-pandemic norms, according to Marcus & Millichap's mid-year industrial investment outlook. Compared with the broader commercial real estate market, industrial transaction activity remains robust.
Trading below the $5 million threshold played a major role in overall industrial deal flow. Many transactions involved small-bay industrial assets, and similar listings should attract private investor attention during the second half, said the report.
Going forward, the industrial sector faces tariffs, trade and broader economic uncertainty, which could impact markets that rely on imports from China, particularly West Coast ports, said the report. In addition, fluctuating fuel prices and potential labor shortages could influence industrial property performance over the coming six months and into 2026. Over the longer term, Marcus & Millichap expects industrial space demand to continue to strengthen.
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Although Industrial availability has nearly doubled since hitting a record low in mid-2022, vacancy among properties built prior to 2020 was below 5% in March. This indicates that facilities constructed over the past five years account for much of the nation’s vacant stock, said the report.
“Some buyers may obtain reduced pricing for newly built assets yet to reach stabilization,” said Marcus & Millichap. “At a time of rising replacement costs, this strategy may prove enticing for investors with experience filling speculative properties. Meanwhile, some owner-users seeking better control over their bottom line may also pursue recently constructed properties.”
Vacancy disparities also extend across subsectors and property sizes, the report said. Approximately 10.2% of distribution space was available for lease in April, but vacancy dropped to 6.5% when excluding properties over 100,000 square feet. Warehouse availability is also skewed by larger properties, as vacancy among 10,000- to 100,000-square-foot buildings was 4.4% in March.
A pullback in completions has begun to emerge after five years of elevated inventory growth, the report said. This subdued construction trend is expected to continue through 2026 and could aid in the absorption of vacant properties. During the first quarter, developers added 67 million square feet of industrial property, the lowest quarterly tally in seven years. The active pipeline has slightly more than 180 million square feet projected for the remainder of 2025. Smaller properties – less than 100,000 square feet – make up only 10% of the active pipeline, while properties larger than 200,000 square feet represent three-fourths of ongoing construction.
About 100 projects linked to the semiconductor supply chain were underway as of June across the country, with Arizona and Texas accounting for one-third of these properties. The rapid expansion of the industry should facilitate future demand among suppliers, logistics providers and other supporting firms for nearby industrial space, said the report.
Funding sources may be in limbo as the $1.2 trillion Infrastructure Investment and Jobs Act is set to expire at the end of September 2026. The potential reauthorization of the bill will be a point of focus for port, airport and rail authorities with expansion plans, said Marcus & Millichap.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
