In 2025, the industrial commercial real estate (CRE) sector shifted away from the frenetic expansion of the post-pandemic years toward a period of normalization amid slower demand and inventory absorption. Industry experts described the year as a return to a more traditional market cycle, where fundamentals remained sound but investor and tenant decision-making was affected by economic uncertainty, including tariffs and macroeconomic shifts. Rather than signaling a downturn, this transition reflected a rebalancing in which quality and location became key differentiators in performance across subsectors.
BGO’s Steve Reents, Managing Partner, Deputy Head of U.S., and U.S. Chief Investment Officer, noted that demand in 2025 was driven by a “flight to quality,” with Class A industrial buildings outperforming functionally inferior assets. He highlighted that facilities built before 2020 with modern features—such as higher clear heights and ample truck parking—continued to attract tenants. Reents also pointed out that markets less exposed to trade volatility, particularly inland logistics hubs, delivered stronger rent growth and fundamentals compared to port-dependent regions. Looking ahead to 2026, BGO’s outlook remains cautiously favorable, with continued segmentation by asset quality and location shaping performance outcomes.