Short-term: Occupiers are likely to continue to be cautious on expansion as they work through excess capacity while managing high costs and an uncertain policy backdrop. But underlying demand for high-quality, modern space is still robust in many markets and leasing volumes are expected to stabilise or grow moderately across regions over the next 12 months as spare capacity is absorbed and delayed deals transact. Vacancy is anticipated to continue increasing during the first half of 2025 as deal conversion timelines remain extended, before stabilizing as new supply reduces. Landlords will demonstrate greater flexibility in markets with higher vacancy, offering more concessions to attract and retain tenants.

Long-term: Despite a slowdown in activity following the pandemic-era surge, the industrial market remains poised for long-term growth. Evolving supply chains, persistent consumer and e-commerce growth and increasing demand for last-mile facilities will continue to underpin the sector’s long-term prospects. An ongoing emphasis on nearshoring or diversifying manufacturing operations will provide further support to industrial real estate demand in many markets. Greater barriers to new supply, coupled with tenant demand for more modern, efficient buildings, will support renewed rental growth for high-quality space as construction declines from recent peak levels.