America’s warehouse market is recalibrating after years of aggressive expansion, with vacancies reaching levels not seen since 2014. A combination of paused leasing decisions, shifting trade policy, and record-high subleasing is weighing on demand, even as rents keep rising.
Trade Volatility and Subleasing Push Vacancy Higher
Warehouse vacancy in the U.S. rose to 7.1% in Q2 2025, the highest level in more than a decade, according to Cushman & Wakefield. That marks a steady increase from 6.9% in Q1 and 6.1% a year ago, breaking above 7% for the first time since 2014. A significant contributor to the slowdown has been hesitation among retailers and manufacturers reacting to fluctuating trade policy. The Trump administration’s shifting tariff stance drove a brief spike in inventory buildup, followed by a sharp pullback in imports and leasing decisions.
“The market has been moving in what I would call fits and starts,” said Jason Tolliver, head of logistics and industrial real estate at Cushman in an official statement. Some firms are cautiously reentering the market after the administration paused or rolled back key tariffs, but many are still sitting on the sidelines.
Instead of leasing new facilities, companies are maximizing existing footprints. Sublease listings hit a record 225 million square feet in Q2, up 25% year-over-year, according to Savills. That reflects continued efforts by tenants to rightsize portfolios bloated during the pandemic’s e-commerce surge.
Construction Slows, But Long-Term Pricing Holds
Despite weaker demand, rent levels have not declined. Cushman reported a 3% increase in average net rents year-over-year, reaching $10.12 per square foot. This pricing resilience stems from the industrial sector’s longer-term leasing horizons, where decisions are driven more by future positioning than immediate market softness.
Meanwhile, developers are dialing back. Only 72 million square feet of new warehouse space came online in Q2, a 45% drop from the same quarter in 2024. Yet even with the construction slowdown, total U.S. warehouse stock remains elevated, up 19% from 2019 levels, while new leasing activity is 5% below what it was six years ago.
The result is a sector undergoing a slow but necessary reset, balancing oversupply with shifting import patterns, labor availability, and automation investments that impact warehouse footprints.
Beyond Vacancy: A Shift Toward Performance-Driven Space
Even as vacancies rise, the more telling metric may be the quality and adaptability of the space itself. Operators are increasingly prioritizing facilities that support automation, ESG compliance, and rapid fulfillment, not just square footage. According to recent trade data, demand is steadily growing for sites with EV charging infrastructure, on-site renewables, and cold chain capabilities. This suggests that future leasing cycles won’t just absorb excess capacity, they’ll redefine it. Forward-looking landlords may find that retrofitting existing assets could unlock more value than waiting for traditional demand to return.
