After several years as the darling of commercial real estate, the industrial sector is settling into a new phase—one defined by stability, selectivity and more disciplined growth. Industrial properties are still performing well across most metrics, but "the dynamic has changed," Steve Reents, managing partner, deputy head of U.S., and U.S. chief investment officer at BGO, tells GlobeSt.com.
Fueled during the pandemic by extremely low interest rates and surging demand tied to e-commerce and logistics, the market's momentum has now "flipped," Reents says.
"You're now seeing starts meaningfully down and starts slowing. The wave is behind us. There are a lot of high-quality properties out there. There are highly motivated sellers."
Reents notes that new development remains costly, with only modest reductions in construction expenses, if any. Labor shortages have persisted and have been exacerbated the Trump administration's immigration policies—as have high land prices, since many landowners "aren't motivated to sell at market-clearing prices." Even so, he sees this as "a much more attractive period" than two to four years ago, when identifying good opportunities was tougher.
"We're in a period that if you allocated to industrial real estate nationally, you benefited from a lot of tailwinds," Reents says.
Those forces have shifted: higher interest rates and stricter lender underwriting now shape investment decisions. Still, he points to ongoing strengths, such as growing needs for supply chain resiliency, redundancy and faster delivery speeds that continue to support demand for logistics space.
According to CoStar data shared by BGO, vacancy rates remain comparatively healthy. The national industrial vacancy climbed above 9% following the global financial crisis, peaking at 10.3% in the second quarter of 2010. Yet by the fourth quarter of 2025, CoStar reported a far lower vacancy rate of 7.4%.
Reents adds that transaction activity and investor capital have both regained momentum after a slowdown tied to tariffs. While he cautions against expecting dramatic rent growth or shrinking cap rates, he remains optimistic.
"We think the cycle is going to feel different," he says. "The tail of outcomes is going to be broader, but there still is plenty of opportunity in the sector today to outperform."
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