In the first quarter of 2025, the U.S. industrial real estate market showed diverging trends between single- and multi-tenant properties, according to recent data from Northmarq. While both sectors demonstrated resilience, they were impacted differently by changing market conditions and investor behavior.
Single-Tenant Industrial: A Mixed Quarter After a Strong 2024
The single-tenant industrial market saw modest year-over-year growth, with sales volume increasing 2.3% compared to Q1 2024. This comes on the heels of strong momentum throughout 2024. However, on a quarter-over-quarter basis, sales plummeted 47.4% from Q4 2024 to Q1 2025—highlighting a significant slowdown across nearly all regions.
Regional Performance (Q4 2024 vs. Q1 2025):
- Mid-Atlantic: $560.72M → $325.16M
- Midwest: $1.38B → $900.19M
- Northeast: $767.94M → $249.70M
- Southeast: $2.08B → $1.10B
- Southwest: $983.08M → $1.05B (only region to see an increase)
- West: $2.93B → $949.65M
Cap Rate Movement:
Cap rates rose slightly, with the national average moving from 6.50% to 6.56% year-over-year. Most regions experienced modest increases, except the Northeast and West, which saw slight declines.
Who’s Buying?
- 51% Domestic Private Investors
- 26% Domestic Institutional Investors
- 13% Domestic Users
- 7% International Buyers
- 4% Domestic Public REITs
Multi-Tenant Industrial: Still a Top Performer Despite a Slowdown
Although multi-tenant industrial properties experienced a steep 32.1% drop in sales compared to Q4 2024, overall volume reached $16.17 billion in Q1 2025—a 5.8% increase year-over-year. The sector continues to benefit from structural demand drivers such as e-commerce, supply chain evolution, and last-mile logistics.
Regional Sales Declines (Q4 2024 vs. Q1 2025):
- Mid-Atlantic: $1.49B → $1.37B
- Midwest: $3.19B → $2.18B
- Northeast: $2.35B → $1.69B
- Southeast: $6.58B → $2.66B
- Southwest: $5.77B → $3.15B
- West: $4.46B → $3.96B
Cap Rate Trends:
Cap rates rose from 6.50% to 6.81% year-over-year, with small quarter-over-quarter increases in most regions. The Midwest and Southwest saw the most notable rises.
Buyer Breakdown:
- 51% Domestic Private Investors
- 23% Domestic Institutional Investors
- 10% Domestic Users
- 13% International Buyers
- 3% Domestic Public REITs
Conclusion: Demand Drivers Remain Strong, but Caution Creeps In
Despite rising cap rates and a slowdown in sales activity, the fundamentals of the industrial market—especially in the multi-tenant space—remain solid. Continued demand for logistics, e-commerce, and supply chain solutions will likely keep this sector attractive to investors in the long run.
Source: GlobeSt.