2025 Biannual Industrial Market Report: Part Four

CompStak analyzed eight major U.S. industrial markets and billions of square feet of lease and sale data. The latest data shows the industrial sector entering its most meaningful reset since the pandemic boom. Check out the full insights in the 2025 Biannual Industrial Market Report.

CompStak Industrial Rent Index Declined for Third Consecutive Quarter

CompStak’s industrial rent index is now down 4.7% from its recent peak at the end of 2023, following three straight quarters of decline. While still up by nearly 50% from Q1 2020, the recent declines suggest the industrial market is still in a period of mild pricing correction amid a slowdown in demand and uptick in supply following a period of record growth in the 2020 to 2023 period.

Average Lease Term Lengths Tick Up for Leases in Both Bulk and Small Bay Industrial Buildings for Second Consecutive Quarter

In Q3 2025, average lease terms increased for a second consecutive quarter in both bulk industrial buildings (150,000 square feet and larger) and small-bay buildings (under 150,000 square feet). While term lengths remain below their 2022 peaks, the recent uptick suggests tenants may be regaining some confidence after a volatile year in trade policy and broader economic conditions. Bulk assets continued to command longer commitments, with leases averaging roughly 16 months more than small-bay transactions.

Small-Bay Effective Rent Declines Begin to Slow but Remain Steeper Than Bulk

Effective rent declines for both bulk and small-bay industrial leases showed signs of easing in Q3 2025, though growth remained negative year over year for the sixth consecutive quarter. While small-bay rents had been falling more sharply than bulk rents throughout 2024 and early 2025, recent trends indicate that the pace of decline is now more closely aligned with bulk assets. Since effective rents peaked at the end of 2023, small-bay rents remain more significantly impacted, down roughly 8% from the peak. Trade-policy uncertainty and tariff concerns may be weighing more heavily on smaller tenants, while larger, better-capitalized users appear better equipped to weather the choppier economic climate. Even so, the small-bay pricing premium remains intact, holding above 22% in Q3 2025.

Free Rent Periods Lengthen for Ninth Straight Quarter, With Bulk Buildings Posting the Largest Expansion

In Q3 2025, the share of lease term granted as free rent climbed to new post-2019 highs, 4.3% in bulk buildings and a cyclical high of 3.2% in small-bay properties. This marks the widest spread observed in the period analyzed, signaling that tenants currently hold greater concessions leverage in the bulk segment.

Check out the full insights in the 2025 Biannual Industrial Market Report.