More Than Half Of U.S. Warehouse Space Built In Q1 2025 Is Vacant

A Post-Pandemic Reality Check for Industrial Real Estate

The industrial real estate industry is undergoing a significant transformation. After years of aggressive speculative development and quick building, warehouse space across the United States is at historic levels of vacancy. More than half of all new warehouse space delivered to the market in the first quarter of 2025 remains empty. This adjustment marks a rebalancing after a pandemic-driven boom that pushed occupancy rates and rents to record highs.

Close-up showcasing eco-friendly features in an industrial warehouse.

Speculative Development Overshoots Demand

Of the 73 million square feet of industrial real estate that came online in the first quarter, 71% was speculative development—projects developed without committed tenants. Approximately 45 million square feet of speculative warehouse space came to market unoccupied, raising the national vacancy rate to 7%.

This increase in vacancy is a clear warning sign: the rate of new construction has outpaced current lease demand. For businesses looking to envision this transition, developers are increasingly using 3D rendering technologies to better market vacant facilities, allowing potential tenants to understand how the warehouse space could be tailored to their needs.

Occupancy Trends and Market Disparities

Half Of U.S. Warehouse Space Built is Vacant? While occupancy levels in smaller facilities remain generally consistent, demand for larger warehouses is declining. Properties under 100,000 square feet are currently 96% occupied, indicating a strong demand for tiny footprints. In contrast, facilities larger than 250,000 square feet have vacancy rates of more than 10%.

Deals larger than 1 million square feet accounted for only 5% of leasing volume in Q1 2025, down from 9% the year before. Mid-sized deals, particularly those ranging from 100,000 to 300,000 square feet, continue to account for a substantial share of lease volume, accounting for 40% of total activity.

Declining Asking Rates in Nearly 40% of Markets - Than Half Of U.S. Warehouse Space Built Is Vacant

Half of U.S. warehouse space built is vacant - The supply-demand imbalance has put downward pressure on prices. Nearly 40% of tracked markets saw asking prices fall in the first quarter, however national average rents remained stable at $10.11 per square foot due to strength in certain markets. Smaller warehouse space frequently fetches a $2 to $3 premium due to sustained high occupancy and tenant demand.

As vacancy rates rise, businesses and developers increasingly rely on immersive 3D rendering and visualization solutions to make their listings stand out. These techniques help to present industrial real estate in the best possible light, even when actual occupancy is low.

High angle view showcasing the interior of an unoccupied warehouse.

A Market Correction Underway

Leasing activity has decreased, with leasing volume down 6.4% year on year. At the same time, net absorption—the difference between space leased and space vacated—has not kept up with new deliveries. While warehouse and logistics operators increased net occupancy by 21 million square feet, the manufacturing category had a significant dip, with 30 million square feet of negative absorption.

The expanding supply-demand mismatch has caused an intentional delay in new construction. Over the last year, about one-quarter of the markets' construction pipelines have been cut in half. Only five markets now have 10 million square feet or more under development, down from 12 last year.

What This Means for Design and 3D Rendering Companies

This move opens up significant opportunities for 3D rendering and design service providers. As warehouse space remains unoccupied, developers and brokers must differentiate their listings. Photo-realistic renderings, interactive walkthroughs, and AR/VR experiences are increasingly used to market industrial real estate.

When vacancy rates rise, floor plans and square footage alone are insufficient. Visual storytelling becomes essential for helping prospective renters envision the space's possibilities. The need for custom renderings of speculative construction projects is increasing, since these visuals can tip the balance in a tenant's decision-making process.

FAQ: U.S. Warehouse Space & Industrial Real Estate in 2025

Q: Why is there so much vacant warehouse space in the United States by 2025?

A: A rise in speculative development during and after the pandemic resulted in an excess of warehouse space, particularly in larger facilities. More over 45 million square feet of new property became available without renters in Q1 2025, raising the national vacancy rate to 7%.

Q: What size warehouse has the lowest vacancy rate?

A: Smaller warehouse space under 100,000 square feet has the highest occupancy rate—currently 96%. These spaces are in high demand, with premium asking rentals.

Q: What is the leasing volume trend in 2025?

A: Leasing volume in Q1 2025 decreased by 6.4% compared to the same time in 2024. The largest leases—more than 1 million square feet—now account for only 5% of the total leasing volume, down from 9% the previous year.

Q: How do industrial real estate owners lower vacancy rates?

A: By utilizing high-quality 3D rendering and visualization, owners can better market their properties. Interactive graphics and walkthroughs enable tenants visualize how the warehouse space might be used or customized, increasing demand and shortening the time on the market.

Q: Are asking rates declining in all markets?

A: Not uniformly. While nearly 40% of tracked markets had a decrease in asking rents, the national average remained stable due to strength in others. Smaller warehouse space continues to command a premium due to high occupancy.

Final Thoughts

The industrial real estate market in the United States is definitely in a state of correction following the pandemic. Rising vacancy rates, declining leasing volume, and an excess of speculative projects are changing the way developers and brokers approach the market. For companies that specialize in design and 3D rendering, this gives a strategic opportunity to help bring unoccupied warehouse space to life—virtually—so tenants can see not only the square footage, but also the future.