A surge in bankruptcies and corporate consolidations has pulled industrial net absorption into negative territory for the first time since the Great Recession.

By the numbers: Newmark reports the sector shed 1.3M SF in Q2 2025—the first quarterly decline since 2009. For the first half of the year, net absorption totaled just 47.4M SF, down 35% from last year. Many occupiers are trimming space as they focus on cost control and margin protection against an uncertain economic and trade backdrop.

Headwinds: The shifting trade landscape is a key drag. The Trump administration’s move to hike tariffs on Canadian imports to 35%, coupled with temporary extensions for Mexico and China, has created volatility. Effective tariff rates now range between 13.9% and 32.8%, leaving many tenants reluctant to sign long-term leases.

Market trends: Industrial development has slowed for the 11th consecutive quarter, with the pipeline falling to 282.4M SF—its lowest level since 2018. Labor metrics are also softening: industrial employment has plateaued, while manufacturing jobs have declined for three straight months. Bankruptcies, including Joann’s, are releasing large blocks of warehouse space back to the market in states like California and Ohio.

Silver linings: Consumer demand remains strong, sustaining activity from e-commerce firms and major retailers. Amazon, for example, is expanding its same-day grocery delivery to more than 1,000 cities. At the same time, manufacturing-related construction continues to surge, with June spending reaching $116B—almost twice the pre-pandemic average.

The Bottom Line

The industrial market is entering a new cycle—transitioning from the rapid expansion of recent years toward a more measured, efficiency-oriented phase. Going forward, expect a split market: some occupiers will downsize, while others pursue growth tied directly to resilient consumer and manufacturing demand.