Lessors of Nonresidential Buildings NAICS 531120

Nov 17, 2025 - Warehouse Market Conditions Improve

• Industrial real estate is showing signs of stabilization, with climbing demand and a shrinking supply pipeline helping to ease vacancy pressures, according to Supply Chain Dive. Colliers reports Q3 net absorption increased by 20 million square feet year over year and was the strongest since Q1 2023. Companies are increasingly comfortable making long-term decisions, despite tariff-related uncertainty, according to Prologis President Dan Letter. Ecommerce and supply chain investments are driving demand as firms aim to improve service while reducing costs. Letter noted that large, well-capitalized companies are leading the way, often followed by smaller businesses. Meanwhile, Colliers reports that industrial space under construction fell to 270 million square feet in Q3, the lowest since 2018. Despite this, markets like Dallas-Fort Worth and Houston are seeing construction growth amid consistent tenant demand.
• US office vacancies dropped to 18.8% in Q3 from 19% a year earlier, marking the first year-over-year decline since the pandemic, according to CBRE and reporting by Facilities Dive. Vacancies are falling amid a drop in new construction and the conversion or demolition of older spaces. Leasing activity rose 15% over Q2 2025 and 11% year over year. However, the average lease size in Q3 was down 24% from pre-pandemic levels, partly due to the prevalence of hybrid work. Small occupiers led demand, with leases between 10,000 and 20,000 square feet making up 56% of year-to-date activity. Remote-heavy markets such as Washington, DC, Boston, and Seattle saw demand surge, while traditional hubs like New York and Chicago declined. Prime buildings outperformed, with vacancy spreads widening. Average rents rose 1.7% to $32.47 per square foot, though inflation-adjusted asking rents remain at their lowest since 1988.

• The sluggish return to offices after the pandemic may put downward pressure on demand for office space. Despite many employers’ efforts to curtail remote work, average office attendance is still down compared to pre-pandemic norms, according to The Wall Street Journal. Overall, companies require 12% more time in the office than in early 2024, according to the workplace think tank Work Forward. However, Americans work from home about 25% of the time, unchanged from 2023, according to a Stanford economist who has operated a monthly survey of 10,000 US workers since 2020. Some industry watchers suggest that companies’ priorities have shifted away from in-office enforcement amid other more pressing concerns, including cooling consumer sentiment and unpredictable shifts in US trade policy.
• Mounting real estate foreclosure and repossession activity could impact some building owners in vulnerable regions or market segments. Real estate foreclosure starts and repossessions increased in the third quarter of 2023, according to Attom's Q3 Foreclosure Market Reports. In Q3, US foreclosure starts increased 16% compared to the third quarter of 2024, and repossessions climbed 33% over the same period. Attom's CEO, Rob Barber, said, "In 2025, we've seen a consistent pattern of foreclosure activity trending higher, with both starts and completions posting year-over-year increases for consecutive quarters. While these figures remain within a historically reasonable range, the persistence of this trend could be an early indicator of emerging borrower strain in some areas." States with some of the most foreclosure filings in the third quarter included Florida, Nevada, and South Carolina.