Industrial occupiers are entering a period of widespread portfolio realignment, as rising occupancy costs, a looming lease renewal wave and a pronounced flight to quality reshape demand across logistics markets, according to CBRE's latest industrial and logistics occupier sentiment survey.
The findings point to a sector that remains fundamentally expansionary, but increasingly disciplined. More than 90% of respondents expect to maintain or grow their real estate footprint over the next 36 months, even as cost pressures intensify. Nearly 67% of occupiers report that more than a quarter of their leases will expire within that same period, representing an estimated 1.7 billion square feet of potential renegotiations.
CBRE notes this upcoming wave is likely to trigger renewed pricing pressure and increased concessions, particularly for second-generation and pre-2020 assets, where more than 400 million square feet of negative net absorption has already been recorded.
High rents and occupancy expenses were identified as the top real estate challenge by 40% of respondents, with companies expecting an average 27% rent increase upon renewal of five-year leases expiring at the end of 2025. In high-cost markets such as Northern-Central New Jersey, Houston and South Florida, renewal pricing could effectively double, underscoring the pressure driving tenants to rethink their footprints.
Twenty-three percent of occupiers plan to upgrade into newer facilities, while 17% are focused on reducing costs through consolidation. When selecting locations, respondents prioritized availability of modern space (23%), lower costs (17%) and supply chain diversification (16%). Building-level preferences reinforce that shift, with occupancy cost, flexible lease terms and proximity to transportation hubs ranking as the most important factors.
The Southeast leads expansion plans at 30%, followed by the Midwest at 22%, driven by population growth, logistics connectivity and a growing manufacturing base. Within the Southeast, port access and new industrial development remain key advantages, while Midwest markets benefit from affordability and proximity to end-consumer demand.
Third-party logistics providers (3PLs) continue to gain share, accounting for 36% of bulk leasing activity and expected to expand further, as 32% of respondents plan to increase reliance on outsourced logistics. Meanwhile, nearly half of occupiers with U.S. manufacturing operations intend to expand domestic production, driven primarily by the need for faster delivery to consumers and shorter production cycles rather than tariff avoidance.
Despite broader technological and structural shifts in the economy, traditional fundamentals still dominate decision-making. Only 2% of respondents cited power capacity as a key building factor, while AI adoption remains limited: 59% of occupiers are not currently using it and 36% are not planning to in the near term. Instead, logistics access, labor availability and cost efficiency remain the primary drivers of site selection, according to the survey.
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