Reacting to prolonged tariff uncertainty, the logistics real estate sector during the second quarter of 2025 saw quarter-over-quarter improvements in net absorption, new leasing activity, and proposals, according to a release from warehouse leasing firm Prologis.
That move showed that customers are looking beyond short-term volatility to active longer-term plans, the firm said in its “Industrial Business Indicator” (IBI) report.
But that volatility is also driving the trends measured in the paper. According to Prologis, utilization averaged 85% in Q2, up 50 basis points compared to full-year 2024, in part because of customers front-loading inventories amidst changing trade policies. And competition for high-quality space will intensify over the coming quarters as deliveries drop by 30% in the second half of 2025 compared to the same period in 2024.
“We maintain that utilization will be volatile in the near term as shifting trade policies disrupt typical import patterns but generally trend upward as companies grow into any excess capacity,” the Prologis researchers said.
Those conditions can be seen today, as import volumes and inventories grew in the first half of the year as customers front-loaded stock in anticipation of tariff-related disruptions. And July’s utilization rate dropped, likely temporarily, as robust June retail sales (likely to continue into July, given early reports of healthy Prime Day revenues across merchants) emptied shelves and choppy import patterns delayed restocking.
Likewise, the IBI Activity Index reflected slower growth in activity through July as both import flows and retail sales were volatile month to month. Following a surge in pre-buying ahead of tariff implementation, retail sales leveled off and big-ticket purchases slowed, Prologis found.
In conclusion, the study said that while long-term structural drivers of logistics real estate demand remain intact—including the growth of e-commerce and the need to modernize operations—the market is navigating a period of transition shaped by macroeconomic and policy uncertainty. In the face of this volatility, more customers are making deliberate, forward-looking decisions, positioning themselves for long-term success despite near-term ambiguity.
