Industrial leasing demand is redefining the market’s sense of resilience, with steady momentum among mid-sized users, a cautious outlook on outsized deals and a manufacturing-driven uptick that signals both strength and selectivity in U.S. industrial real estate. While headline risk remains—from shifting trade policy to port market softness—investor appetite and core capital placement reinforce industrial’s reputation as a durable asset class even after pandemic-era volatility. In a recent webinar, CBRE’s Will Pike and John Morris outlined an industrial sector shaped by these crosscurrents, marked more by subtle evolution than seismic change.
The story of 2025 thus far is one of resilient but measured growth. According to Morris, leasing activity in the mid-sized range—specifically 50,000 to 100,000 square feet—remains robust even as the largest occupiers have stayed on the sidelines for over two years. “The biggest users are quiet,” Morris noted, adding that significant one-million-square-foot deals are unlikely to return until broader economic markers improve.
That leaves current market momentum dependent on steady midsize deals rather than blockbuster transactions. Morris did express some caution, anticipating slower growth for the remainder of the year and into the first half of 2026.
However, he was quick to point out that the sector’s biggest leasing highs—driven by subleasing and aggressive expansion of prior years—could well return once economic sentiment shifts, though he suggested this is likely four or more quarters away.
From the investment perspective, Pike emphasized that industrial continues to command strong capital interest, even after a “pullback immediately after liberation day.” The perceived clarity on trade policy that followed has largely steadied the waters, restoring a business-as-usual attitude among buyers and sellers. Notably, port market softening has created some local headwinds, but demand and capital market activity in places like South Florida are reportedly at “an all-time high.” Pike underscored that the sector’s underlying strength means that short-term hesitancy—compounded by policy uncertainty—has faded, and bullish sentiment is growing again as 2025 draws to a close.
Manufacturing is quietly emerging as a growth driver. Morris called attention to the fact that manufacturing-driven leasing is up 50% over the previous year, especially for regional manufacturers expanding facilities from “60,000 feet today…to 100,000 feet.” This is not heavy cross-border manufacturing but rather smaller-scale assembly and regional distribution, which remains active despite lingering uncertainty around U.S.–Mexico–Canada trade relationships. While questions about large, transformational investments continue, the prevailing mood is one of optimism among mid-market occupiers and assembly users, with major manufacturing investments expected to return once there is “more clarity” on cross-border trade.
One thematic constant running through both executives’ comments is the steadiness of the industrial asset class relative to pandemic-era “frenzy.” Morris described today’s environment as “a little bit less exciting,” and characterized that as a positive. “Steady is good,” he remarked, and pointed to the continuing abundance of core capital in the sector. Industrial has become the performance benchmark among institutional classes, especially for investors willing to accept leasing risk in tertiary markets, or those targeting Core Plus and value-add opportunities.
According to Pike, the opportunities for outsized returns are found in markets where leasing momentum is less aggressive, requiring patience and selectivity but offering potential for higher yield as leasing cycles inevitably turn.
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