2025 Industrial Construction Cost Guide

Robust Demand for New Construction W/D new leasing activity by year built

32%

33%

37%

42%

58%

68%

67%

63%

58%

42%

2020

2021

2022

2023

2024

Built since 2020 Built prior to 2020

Source: Cushman & Wakefield Research; new leases of 100,000 SF+ included in analysis

FLIGHT TO QUALITY FAVORS NEW CONSTRUCTION

Strong demand for industrial space in the U.S. pushed new leasing to record levels in 2021. Warehouse occupiers have been especially active since 2020, taking up large blocks of space across the country as they built out their e-commerce and 3PL operations. Since 2021, a flight to quality has emerged, as occupiers gravitate to modern facilities with high clear heights, automation capabilities and enhanced power infrastructure. This shift is evident in the leasing activity by large occupiers, with 100,000 sf or more. New leasing activity for warehouses built after 2020 grew from 58% in 2021 to 63% in 2024. E-commerce tenants have shown a strong preference for newer space, with 96% of their new leasing activity since 2023 concentrated on warehouse space built after 2020 in deals of at least 100,000 sf. This trend has resulted in stronger leasing absorption of newly built warehouse space. Warehouses built in 2023 and 2024 posted positive absorption, while older inventory experienced negative absorption. The preference for newer space is expected to continue, but with a shrinking new construction pipeline, fewer opportunities will be available. This could prompt occupiers to upgrade existing facilities as an alternative to new product.

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