2025 Biannual Industrial Market Overview: Part One

The industrial real estate sector is facing a pivotal moment. While some fundamentals remain strong—like growing transportation and warehousing employment and resilient e-commerce demand—others signal a potential shift. From tariff-driven port activity to softening rent trends and growing tenant leverage, the first half of 2025 has been anything but quiet.

CompStak’s latest Biannual Industrial Report dives deep into the forces shaping today’s market, and over the coming weeks, we’re breaking down the most important insights in a blog series built for industrial professionals, investors, and analysts.

We’ll unpack how upcoming lease expirations could spark a wave of rent repricing, why bulk rents are falling faster than non-bulk, and what shifting escalation rates and tenant incentives mean for the months ahead. You’ll also get fresh context on trade dynamics, e-commerce resilience, and the evolving risk landscape in key logistics markets.

Interested in the full insights? Download the full report here!

U.S. Transportation & Warehousing Job Growth Was 4× Manufacturing’s YOY Decline, but Momentum May Slow in Coming Quarters

Trends in U.S. manufacturing and transportation & warehousing employment continued along their respective trajectories in Q1 2025, with manufacturing marking its 18th consecutive month of year-over-year declines and transportation & warehousing recording its 14th straight year-over-year increase as of March.  As of March 2025, the number of employees in manufacturing was down 1% from its most recent peak in November 2022, and down 0.6% from one year ago. Meanwhile, the transportation & warehousing sector was 2.1% higher than its previous peak in July 2022, and up 2.4% from the year prior as of March 2025.

Post-2020 Industrial Job Growth Concentrated in the West and South, with Nevada Topping Both Manufacturing and Transportation Sectors

Since 2020, the fastest growing states for manufacturing jobs have been largely found among Western and Southern states. From March 2020 to March 2025, four of the top 10 states by growth rate—Nevada, Utah, Florida, and Idaho—posted double-digit gains. However, not all top-performing states sustained momentum through 2025; Arizona, Texas, and Georgia saw year-over-year declines from March 2024 to March 2025.
In the transportation and warehousing sector, the geographic pattern was less defined, though Nevada again led the nation with a 29.6% five-year increase. Mississippi also ranked in the top 10 but grew more modestly at 19.8%. As of March 2025, most top states for growth since March 2020 also had year-over-year growth, with the exceptions of Nevada, Arizona, and Mississippi.

West Coast Ports See Year-Over-Year Spike in Volume as Importers Rush to Beat Tariffs; Reversal Expected Soon

Since 2018, major U.S. ports have generally experienced positive growth in total TEU volume, with New York/New Jersey, Long Beach, and Los Angeles competing as the nation’s busiest ports. Houston posted the strongest long-term gain, up 68.8% from March 2018 to March 2025, while Long Beach saw the largest year-over-year increase at 25%. More recently, the Port of Virginia led month-over-month growth in March 2025 with a 23% gain, while both Long Beach and Los Angeles posted declines of 14.2% and 15.8%, respectively.

Despite those recent declines, West Coast ports — including L.A., Long Beach, and Oakland — led U.S. container volume growth in Q1 2025, with total volume up 13% year over year from Q1 2024. This surge was likely fueled by a short-term import push as companies advanced shipments ahead of expected tariffs. A reversal is anticipated in the coming quarters as tariffs take effect and volumes adjust.

 E-Commerce Growth Stable Quarter over Quarter at New Peak Since Q2 2020 While Retail Sales Rose Slightly Ahead of Tariffs

E-commerce as a share of retail sales hit a high in Q2 2020 at 16.3% and rose to its second highest level of 16.2% in Q3 2024. Since then, that share has held steady, and while possibly a lagging indicator, retail sales have yet to decline as of Q1 2025. March 2025 retail and food service sales rose 1.7% month over month and 2.7% year over year, led by motor vehicles and parts, in a sign that consumers could be attempting to make major purchases before the onset of tariffs. Additionally, future reports may show softening as the higher rates of tariffs took effect in April and May.

The Logistics Managers’ Index Warehousing Capacity Measure Hit Its Lowest Level in Over a Year in May, Slipping to Neutral

According to the Logistics Managers’ Index, warehousing capacity fell to its lowest reading in over a year in May 2025, entering into neutral territory with a reading of 50.0 in the largest year-over-year decline since July 2024. May’s reading indicated warehousing capacity was neither expanding nor contracting with its status at 50.0 as tariff-related import surges and inventory buildup compressed available space.
Meanwhile, warehousing utilization moved further into expansionary territory in another possible sign of importers attempting to get ahead of changing trade policy. The overall LMI also slightly increased but was still 5.4% lower than its most recent peak in February 2025 and with its reading above 50.0, managers still feel logistics is in expansionary territory despite recent turbulence.

Interested in more insights? Download the full report here!