REAL ESTATE NEWS

Sales of smaller industrial properties are proving to be a bright spot in a cooling market. Transactions for industrial assets priced between $5 million and $25 million reached $5.89 billion in the second quarter of 2025, according to Green Street.

That momentum has helped keep industrial near the top of the investment charts. In the first half of 2025, the sector captured 24% of all commercial property sales — more than retail at 21%, office at 18%, and hotels at 8%, and trailing only multifamily’s 26%. By comparison, investment in larger industrial deals of $25 million and greater slowed in the second quarter, with Green Street citing fallout from the Trump administration’s tariffs, which took effect in April.

E-commerce demand remains the biggest factor underpinning warehouse absorption, and Amazon continues to dominate the sector. Green Street estimates that online retail will account for more than half of total net absorption in the 50 largest U.S. metro markets this year. The firm noted that given current trade policies, Amazon will comprise an outsized share of that leasing activity, suggesting that without tariff headwinds, transaction volumes could have been even stronger.

Looking ahead, Green Street projects that by 2026, e-commerce will drive about 25% of incremental warehouse demand. At the same time, slower economic growth and gains in productivity and automation are expected to reduce the overall amount of space needed, cutting demand by about 5% per year for every incremental dollar of online sales.

Sales totals by market reveal some sharp contrasts across the country. Los Angeles led all metros in the first half of 2025 with $517.6 million in industrial transactions across 53 properties, though that was down 10.3% from a year earlier. Other top markets included Chicago ($421 million, up 6.7%), Philadelphia ($367.4 million, down 1.8%), Boston ($362.6 million, up 8.5%), and Minneapolis ($336.1 million, up 37.7%). Phoenix posted $307 million in deals, while Northern New Jersey tallied $276.6 million, Orange County logged $273.8 million, New York reached $265.9 million, and Dallas/Fort Worth closed the top 10 with $264.9 million.

The next tier of markets saw a mix of gains and setbacks. Atlanta recorded $253.9 million in sales, up slightly by 1.8%, while the Inland Empire fell sharply, down 36.7% to $245.1 million. Other active metros included Seattle ($229.7 million, up 6.2%), Houston ($206.1 million, up 11.9%), Miami ($204.5 million, up 17.6%), Denver ($204.1 million, up 11.7%), and Oakland-East Bay ($197.5 million, down 4.4%). San Diego contributed $196.6 million, nearly flat year-over-year, while Central New Jersey surged 57.3% to $178.8 million. Milwaukee posted the sharpest increase, with $161.2 million in sales for the first half, up nearly 83% year-over-year.

Source: GlobeSt/ALM