2025 Biannual Industrial Market Report: Part Five

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.

Short-Term Leases See the Sharpest Drop in Annual Escalations as Rent Softens

Annual average lease escalations have fallen the most from their recent peak for leases with terms under five years in both bulk and small-bay buildings. As industrial rents have softened, tenants signing shorter-term deals have secured lower annual rent increases, reaching the lowest levels in small-bay leases under five years. By contrast, escalation rates for longer-term leases have converged across segments, with both bulk and small-bay deals averaging 3.5% as of Q3 2025.

2025 Marked a Shift in Small-Bay Industrial Buyer Composition, with Private Equity Posting the Largest Year-Over-Year Gains

Among the top 20 buyers of small-bay industrial buildings across the eight markets analyzed, private equity firms posted the largest year-over-year increase in 2025 by both square footage acquired and total sales volume. Private equity’s share of square footage purchased more than doubled, rising from 31.0% in 2024 to 63.3% in 2025, while its share of total sales volume increased from 37.4% to 47.2%.

By square footage, family offices recorded the second-largest increase, rising 6.2 percentage points year over year, while traditional investment managers saw the largest decline among capital sources, down 10.0 percentage points. By total sales volume, private companies (non-REITs) posted the second-largest increase at 5.7 percentage points, while listed REITs experienced the steepest decline, with their share falling 15.9 percentage points year over year. Private equity’s increased exposure in 2025 could reflect its greater flexibility and higher appetite for risk as opportunistic capital amid pricing resets and near-term uncertainty, while more risk-averse buyers, such as listed REITs and traditional investment managers, pulled back due to their return threshold discipline.

Single-Tenant Net Lease Industrial Remains a Bright Spot, Posting Stronger Rent Growth Than the Broader Industrial Market Since 2019

Single-tenant net lease industrial posted starting rents in Q3 2025 that are more than 94% higher than in Q3 2019, significantly outpacing the 67.9% growth recorded across the rest of the industrial market over the same period. While starting rents for single-tenant net lease industrial have declined more from their late-2023 peak, the segment continues to command a rent premium. This is reinforced by positive spreads between current in-place rents and market starting rents across all eight markets analyzed, indicating continued upside. In all but the Philadelphia–Central PA–DE market, these spreads are wider for single-tenant net lease industrial than for the broader industrial market.

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