Industrial Sales Hit $68B as Cap Rates Signal Market Split
Industrial investment sales surged to $68.4 billion through November, making 2025 the strongest transaction year since 2022, even as cap rates reflected a bifurcated market between core logistics facilities and lower-quality properties, according to Crexi's December CRE market analysis. Closed-deal cap rates increased 11 basis points month over month to 7.33%, improving 12 basis points year over year, while asking cap rates compressed 3 basis points to 7.28%, down 13 basis points year over year.
Class A properties in growth markets traded at yields between 4.5% and 6.5%, while secondary or vacant assets commanded yields of 7% to 8%. This pricing divergence aligns with quarterly repricing as investors differentiate between core distribution facilities in supply-constrained markets and commodity space in oversupplied metros. Although core logistics assets maintained strong demand in December, buyers were cautious about lower-quality or oversupplied properties.
The average industrial sale price fell 2% month over month to $98.75 per square foot, essentially flat year over year, according to Crexi. Asking prices dipped 0.4% to $121.84 per square foot, still 9.6% above last year, reflecting sellers' focus on quality assets while adjusting for softness elsewhere. While headline asking prices may stay elevated, sold pricing is softening in commodity stock.
The sector showed clear signs of normalization as it absorbed pandemic-era oversupply and shifted toward sustainable growth. National industrial vacancy reached roughly 7.1% to 7.5% during the third quarter, the highest level since 2013, but remained steady quarter over quarter as speculative construction slowed and absorption increased for the second consecutive quarter. Crexi expects fundamentals to stabilize through early 2026, with vacancy forecast to peak near 7.5% and absorption projected to improve.
Net absorption hit 45.1 million square feet in the third quarter, up 30% from the previous quarter and 33% year over year, with year-to-date absorption totaling 108 million square feet, roughly matching 2024 levels. On the supply side, the under-construction pipeline fell 13.4% year over year, with construction starts below recent historical averages. Build-to-suit projects now represent 39% of the pipeline, up from 34% a year ago, signaling developers' preference for pre-leased, tenant-specific assets.
National asking rents averaged $10.10 per square foot in the third quarter, up 1.7% year over year, with nearly 60% of U.S. markets seeing positive rent growth and nine markets posting double-digit increases. On the leasing side, asking rents held at $14.20 per square foot in December, while effective rents declined 2.9% month over month to $13.24 per square foot, remaining 5.4% above last year. This indicates more competitive lease negotiations as tenants gain leverage, though modern, well-located facilities continue to command strong pricing.
Crexi notes that opportunities remain concentrated in modern, well-located logistics assets where fundamentals are stabilizing first. Investors should target submarkets with infrastructure advantages, limited new supply, and build-to-suit development, which are early indicators of near-term rent growth recovery in 2026, said the report.
Source: GlobeSt/ALM