As we move into 2025, the industrial real estate market feels like it’s at an inflection point. The big question on everyone’s mind seems to be: What’s next? Vacancy rates are projected to peak nationally at around 6.8% by mid-year, according to CBRE’s 2025 U.S. Real Estate Market Outlook. Here in the Southeast, we’re seeing vacancy trends continuing to shrink; and the market is adjusted. For businesses thinking about growth or relocation, this year could bring some interesting opportunities.
One of the biggest shifts we’re watching is the sharp slowdown in new construction. Nationally, CommercialEdge reports that the industrial development pipeline has dropped by over 50% since 2022. This slowdown has already tightened availability in some markets, and it’s likely to become more noticeable as we move through 2025. For tenants who need modern, well-located spaces, now might be the time to make a move before competition picks up again.
On the demand side, manufacturing is continuing to stand out. JLL’s latest Tenant Demand Study found that manufacturing now makes up over 15% of industrial tenant requirements, a 20% jump from last year. Reshoring is clearly a big driver here. Companies are bringing production back to the U.S. to reduce risks and position operations closer to their customers. The Southeast, with its affordable land, competitive costs, and strong workforce, is quickly becoming a magnet for this activity. We’re seeing everything from advanced manufacturing to light assembly operations thriving in the region.
For light manufacturing and distribution companies, smaller facilities are becoming increasingly attractive. NAIOP’s recent forecast highlights that over half of active tenant requirements are for spaces under 250,000 square feet, which aligns perfectly with what we’re seeing in the Southeast. Cities like Charlotte, Atlanta, and Huntsville continue to perform well, offering great connectivity and access to labor markets that support efficient operations.
Looking ahead, 2025 will be the year where reshoring and manufacturing growth could really pick up steam. The slowdown in new construction might create tighter market conditions, but it also opens opportunities for businesses to secure space in well-positioned regions like the Southeast. It’s hard not to feel optimistic about the potential for light industrial companies to thrive as they capitalize on the advantages this region has to offer.
At The Hollingsworth Companies, we’re proud to be part of this exciting evolution. We’re focused on delivering spaces that align with what businesses need today—and what they might need tomorrow. As the year unfolds, we’re keeping a close eye on these trends and the opportunities they bring for the markets we serve.
