Industrial Is Leasing at a Record Pace While Half-Empty

The Signal

• Demand and vacancy are rising together — a late-supply-wave pattern.

• Conviction is concentrated in the biggest boxes, not the market broadly.

• New starts are flat, which sets up a tightening from here.

Two facts sit in tension: leasing is running at a record pace, yet vacancy is still near 7%. Both are true because 2024's development wave is still delivering into a market whose tenants are, finally, signing again.

The tell is deal size. Mega big-box space — over 1.2 million SF — is leading the recovery, and occupiers are extending terms. Tenants don't sign 15-year commitments on a million square feet when they think demand is soft. That's balance-sheet conviction.

The structural read is a coiled spring. Vacancy is elevated because of what already got built; starts are now flat. Record leasing against a frozen pipeline is exactly the setup that pulls vacancy down over the next several quarters.

Implications

Owners of large, modern, well-located logistics product are positioned to convert record leasing into pricing power as the pipeline empties. Owners of small or older infill boxes participate less — the recovery is skewed to the top of the size and quality curve. For developers, flat starts today are next year's scarcity.