--- title: "U.S. Industrial Real Estate: From Boom to Balance" description: U.S. industrial real estate is transitioning from pandemic-driven growth to a more balanced market, offering new opportunities for tenants to negotiate better terms. image: https://blog.keyser.com/hubfs/undefined-2.png --- [Commercial Real Estate](https://blog.keyser.com/topic/commercial-real-estate) , [The Economy](https://blog.keyser.com/topic/the-economy) , [Industrial Market](https://blog.keyser.com/topic/industrial-market) # U.S. Industrial Real Estate: From Boom to Balance [By Brian Uretzky](https://blog.keyser.com/author/brian-uretzky) October 23, 2025 - [** ](https://twitter.com/intent/tweet?url={url}&text={title}) - [** ](https://www.linkedin.com/shareArticle?mini=true&url={url}&title={title}) - [** ](https://www.facebook.com/sharer.php?u={url}) [![audio-blog-button-2](https://blog.keyser.com/hs-fs/hubfs/audio-blog-button-2.png?width=800&height=123&name=audio-blog-button-2.png)](https://blog.keyser.com/hubfs/AI-Generated%20Media/Post%20Narration%20Audio/196542392423-TTS-1759334794757.mp3) When the pandemic hit in 2020, industrial real estate shifted almost overnight. With consumers shopping primarily online, demand for e-commerce distribution and logistics facilities spiked, creating the largest wave of new construction the sector has ever seen — and driving up costs across the supply chain.     ## **The Pandemic Surge** Before COVID, the record for quarterly industrial construction starts across the nation was about **110 million square feet**. In 2021 and 2022, that figure jumped to an average of **140 million square feet per quarter**. Long story short, developers responded to unrelenting space demand with substantial development, breaking ground on new industrial product with roughly 70% of projects built without having a tenant in place.   ![Construction_2](https://blog.keyser.com/hs-fs/hubfs/Construction_2.png?width=670&height=408&name=Construction_2.png) *Source: costar.com* ## **Oversupply Takes Hold** As consumers returned to stores and e-commerce growth normalized, demand for industrial space slowed. At the same time, interest rates were rising, which increased borrowing costs and slowed spending.  The combination of elevated supply and tighter capital markets created pressure across the sector — translating into rising vacancies, and new negotiating leverage for occupiers.   ![Construction_Vacancy093025](https://blog.keyser.com/hs-fs/hubfs/Construction_Vacancy093025.png?width=670&height=371&name=Construction_Vacancy093025.png) *Source: costar.com* In recent years, the market has simply been oversupplied with industrial space — particularly large distribution properties.   ## **A Necessary Correction** Over the past two years, the market has adjusted. New construction has dropped significantly, averaging about **70 million square feet per quarter** — roughly half of the pandemic peak. By 2025, construction starts had fallen to **10-year lows**, helping to allow vacancy rates to stabilize.   This slowdown in new supply is helping to get the industrial market back on track. While there is still a fair amount of industrial space available, conditions over the next 12 to 24 months should bring supply and demand into better balance.   ## **What Tenants Should Watch** Several factors will influence how quickly the industrial market strengthens:   - **Tariff policy** — Trade decisions may increase U.S. manufacturing demand or add inflationary pressure. - **Rates** — If the Fed cuts rates, spending could pick up, but so could development activity. - **E-commerce growth** — While brick-and-mortar retail has regained ground, online sales remain a long-term driver of demand. ![E-Commerce](https://blog.keyser.com/hs-fs/hubfs/E-Commerce.png?width=670&height=269&name=E-Commerce.png) ## *Source: fred.stlouisfed.org * ## **Bottom Line** Industrial real estate is no longer in the “bulletproof” category it appeared to occupy during COVID, but that isn’t a negative. The sector is moving toward a more sustainable footing, where supply and demand are in balance.   For business leaders, this creates a window of opportunity. Elevated vacancy give finance leaders leverage to negotiate lower occupancy costs, secure greater flexibility, and lock in terms that protect margins as the market rebalances over the next 12 to 24 months. [All posts](https://blog.keyser.com) [Brian Uretzky](https://blog.keyser.com/author/brian-uretzky) Brian has 20 years of experience in finance and commercial real estate. Prior to joining Keyser as the new head of Keyser’s Capital Markets Practice, Brian worked at a 250 billion dollar investment manager in Boston. He was the senior trader for Commercial Mortgaged Backed Securities (CMBS), helping to manage a five billion dollar portfolio of CMBS across hundreds of client accounts. [** ](https://keyserco.com/our-team/brian-uretzky/) ##### You might also like ![How California Closets Found the Right Space for Growth](https://blog.keyser.com/hubfs/AdobeStock_1322531871.jpeg) [How California Closets Found the Right Space for Growth](https://blog.keyser.com/how-california-closets-found-the-right-space-for-growth) October 23, 2025 ![Shell vs Turnkey Space: Which Option Is Right for Your Business?](https://blog.keyser.com/hubfs/AdobeStock_1481803663.jpeg) [Shell vs Turnkey Space: Which Option Is Right for Your Business?](https://blog.keyser.com/shell-vs-turnkey-space-which-option-is-right-for-your-business) October 23, 2025 ![How Executives Should Use AI in CRE](https://blog.keyser.com/hubfs/AI%20in%20CRE_3.png) [How Executives Should Use AI in CRE](https://blog.keyser.com/how-executives-should-use-ai-in-cre) October 23, 2025 [![](https://keyser.com/wp-content/uploads/2023/01/cropped-LogoBug-RGB.png)](https://keyser.com/) **Designated Broker **Jonathan Keyser **License Number **KEYSER, LLC LC646225000 [**Privacy Policy**](https://keyser.com/commercial-real-estate/privacy-policy/) SERVICES [**Commercial Real Estate**](https://keyser.com/commercial-real-estate/) [**Business Advisory Services**](https://keyser.com/business-advisory-services/) ABOUT US [**Our Team**](https://keyser.com/our-team/) [**Our Culture**](https://keyser.com/selfless-service-culture/) [**Join The Team**](https://keyser.com/join-the-movement/) RESOURCE CENTER [**Blog**](https://blog.keyser.com/) [**Featured In**](https://keyser.com/featured-in/) LOCATIONS **Keyser World Headquarters **6400 E. 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All Rights Reserved. ```json { "@context" : "https://schema.org", "@type" : "VideoObject", "contentUrl" : "https://stream.mux.com/okbfZnbkwrxri01HeoXkRNWphqK52Njimd009a2uhmItE/capped-1080p.mp4", "dateModified" : "2025-09-25T19:44:56.314Z", "duration" : "PT59S", "height" : 1080, "name" : "US Industrial Real Estate_From Boom to Balance", "thumbnailUrl" : "https://6402157.fs1.hubspotusercontent-na1.net/hubfs/6402157/US%20Industrial%20Real%20Estate_From%20Boom%20to%20Balance.mp4/medium.jpg?t=1758829496314", "uploadDate" : "2025-09-25T19:41:19.388Z", "width" : 1920 } ``` ```json { "@context" : "https://schema.org", "@id" : "https://blog.keyser.com/u.s.-industrial-real-estate-from-boom-to-balance#blogposting", "@type" : "BlogPosting", "about" : [ { "@type" : "Thing", "name" : "Industrial real estate" }, { "@type" : "Thing", "name" : "E-commerce and logistics" }, { "@type" : "Thing", "name" : "Vacancy and construction cycles" }, { "@type" : "Thing", "name" : "Tariff policy" }, { "@type" : "Thing", "name" : "Federal Reserve interest rates" } ], "alternativeHeadline" : "Why a rebalanced industrial market is an opening for savvy occupiers", "articleSection" : [ "Commercial Real Estate", "The Economy", "Industrial Market" ], "author" : { "@type" : "Person", "name" : "Brian Uretzky", "url" : "https://blog.keyser.com/author/brian-uretzky" }, "copyrightHolder" : { "@type" : "Organization", "name" : "Keyser, LLC" }, "copyrightYear" : 2025, "dateModified" : "2025-10-23", "datePublished" : "2025-10-23", "description" : "After a pandemic-fueled surge, U.S. industrial real estate is normalizing. 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