The industrial real estate market looks a lot different than it did just a few years ago. Demand is shifting, vacancy rates are up, and companies are rethinking their space needs. Stephanie Rodriguez, National Director of Industrial Services at Colliers, shares how she’s helping clients make smart decisions in what she calls a “VUCA” era—short for volatility, uncertainty, complexity, and ambiguity.
Supply Chain 24/7: How would you describe the current state of the industrial real estate market in 2025?
Stephanie Rodriguez: The U.S. industrial market is bifurcated at the moment. Record new supply in response to unprecedented industrial demand during and following the pandemic has pushed vacancy up over the last 11 quarters from a low of 3.5% in mid-2022 to 7.1% at the end of the first quarter. While this is a healthy level, historically speaking, it’s also the highest rate since 2015. Some markets built more space than others, especially relative to their size, and vacancy climbed even higher, in some cases well into the double digits. New supply and tenant demand are still out of balance in these markets, while in others, the equilibrium between the two metrics has returned, and vacancy is below the national average and on its way down again. Nationally, vacancy is rising more slowly and is expected to peak by the end of the year as the gap between new supply and demand narrows.
SC247: What lasting effects from the COVID-era e-commerce boom are still shaping demand for industrial space?
SR: The big push for new industrial development in response to unprecedented levels of demand from distributors, third-party logistics providers, retailers, and e-commerce users is winding down. It peaked at 711M SF under construction at the end of 2022 and dropped below pre-pandemic levels to 279M SF by the end of the first quarter. The construction pipeline is projected to shrink further to around 250M SF by the end of 2025, as many developers put their projects on hold, delaying the next wave of speculative construction until vacancy rates begin to fall again and economic clarity emerges.
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