According to Prologis Research, logistics real estate demand has reached an inflection point, with net absorption, lease signings, and build-to-suit activity improving meaningfully in the third quarter of 2025.
Net absorption rose 64% quarter-over-quarter to 47 million square feet, while utilization averaged 84%, reflecting steady inventory movement through supply chains. Although demand has not yet normalized, fundamentals indicate a healthier and more stable market environment.
Larger and e-commerce customers are leading leasing momentum as they refocus on network optimization and long-term strategies, while smaller firms are expected to follow as confidence builds. Core sectors such as food, beverage, healthcare, and essential goods continue to drive activity, whereas discretionary segments remain muted amid elevated interest rates.
With vacancy near 7% and speculative development still well below pre-pandemic levels, supply scarcity is emerging across key markets. Developers have exercised greater discipline, constrained by rising construction costs, limited land availability, and stricter regulation.
Market rents, which declined modestly by 1% in Q3, appear to be approaching a cyclical trough, suggesting limited downside risk and potential rent recovery as new construction slows.
Prologis concludes that Q3 2025 marks a constructive shift in logistics real estate conditions. As more customers transition from caution to action, space scarcity could intensify in 2026, reinforcing the need for advance planning and strategic site selection in high-demand locations.
