The industrial warehouse real estate sector, once a hot commodity, is now facing challenges due to economic uncertainty brought on by changing tariff policies and high inflation. Demand for industrial space dropped by 11.3 million square feet in the second quarter alone, the first quarterly drop since 2010.

NAIOP projects that net absorption will be “nearly flat” for the second half of this year, with expectations of a rebound in absorption starting in the second quarter of 2026. Industrial property sales are matching last year’s pace, with industrial sales totaling $74.3 billion in 2024.

Price appreciation in the industrial real estate market has cooled after significant gains between 2019 and 2022. The average sale price of an industrial property has only increased by 6% this year compared to the 2022 average. The national industrial vacancy rate in July was 9.1%, up from the previous year, while in-place rents were still up by 6.1% year over year.

Read more at CNBC: Quarterly demand for industrial space falls for the first time in 15 years