Big Warehouse Spaces Are Seeing Strong Demand Again

After a period of slower activity, demand for large warehouse facilities across the United States is making a strong comeback. Businesses are once again actively leasing expansive industrial spaces, signaling renewed confidence in the market.

According to Cushman & Wakefield, companies secured 146 leases for warehouses larger than 500,000 square feet last year. This reflects a 31% year-over-year increase and marks the highest level of leasing activity since 2022. Additionally, 42 of those deals were completed in the fourth quarter alone—the most in any quarter since the third quarter of 2022.

Market Rebound After Pandemic Slowdown

Real estate experts believe this surge indicates that companies are returning to the market after a period of reduced demand. Following rapid expansion during the pandemic, many businesses had paused leasing decisions as supply increased.

Now, conditions are shifting positively. As Jason Tolliver, president of logistics and industrial for the Americas at Cushman & Wakefield, said:

“The market is stabilizing and rebounding much faster than anybody really anticipated.”

Key Factors Driving Demand

Several major trends are contributing to the renewed need for large warehouse spaces:

• Reshoring of manufacturing: More companies are setting up production facilities within the U.S., increasing demand for nearby storage and distribution centers.
• Rise of third-party logistics (3PL): Businesses are outsourcing fulfillment operations to simplify supply chains and improve efficiency.
• Growth in data center infrastructure: Suppliers supporting large-scale data center construction require significant warehouse capacity for equipment and materials.
  

Elizabeth Holder, senior research analyst at JLL, explained that logistics providers are taking on larger facilities to meet increasing demand from retailers and other companies looking to streamline operations.

Meanwhile, Mark Russo, head of industrial research at Savills, highlighted the growing impact of data centers, stating:

“Construction in the housing industry has long been a demand driver for industrial, particularly in population growth markets. Now this data-center construction boom is starting to be a bit of a demand driver for industrial,”

Vacancy Rates Show Improvement

The earlier slowdown had significantly affected vacancy rates, especially for large-scale warehouses. A surge in new construction coincided with reduced leasing activity, leading to increased availability.

• Vacancy rates for warehouses over 500,000 square feet climbed to nearly 11% in late 2024.
• This was a sharp rise compared to the pandemic low of 3.3% in mid-2022.
  

However, as demand picked up and developers scaled back new projects, availability dropped to 9.5% by the end of 2025.

Tolliver also noted how quickly excess supply is being absorbed:

“A lot of this space that was on the market, which put downward pressure on rental rates, is getting absorbed very quickly,”

Outlook for the Industrial Sector

The return of strong demand for large warehouse facilities points to a more stable and balanced industrial real estate market. With continued growth in logistics, domestic manufacturing, and data infrastructure, demand for these large spaces is expected to remain steady in the coming years.

Source: Big Warehouses Are Back in Demand