Trends in Warehousing Rents

In 2025 warehouse rents declined by 2.3% in the first half of the year as companies paused leasing decision-making, awaiting clarity around economic conditions and trade policy. In the second half of the year, rent declines slowed to -1.4%. 

This analysis is from a report, Take2025: Pause Shifts to Progress as Rents Approach Inflection, from Prologis. 

The highlights of the report are as follows:

Repricing slowed through the year as market fundamentals stabilized. Softness in early 2025 gave way to renewed activity from large users and e-commerce operators once trade policies fell into a narrower band of potential outcomes. Rent declines moderated in weaker markets while stronger markets continued to post growth. By year-end, stability emerged across a broader set of markets, with 40% of markets showing flat to positive rent change from year-end 2024 levels.

Cost-sensitivity shaped location decisions across global markets. With operating and capital costs elevated, logistics users prioritized careful expansion, keeping interest high and driving pricing in markets and submarkets with lower labor and regulatory costs, as well as lower rents.

A wide gap between market rents and replacement-cost rents constrained new supply. With replacement-cost rents sitting 20% above market rents, development has pulled back sharply.1 High construction costs, regulatory barriers and tighter financing limited new supply.

Healthy demand proved more important to rent resilience than vacancy alone. Consumption anchored demand, concentrating activity and rent growth in areas of positive demographic and spending growth. Manufacturing-heavy regions in Mexico, Canada and China faced demand and rental headwinds due to uncertainty around trade policies. 

The report notes the following trends (excerpted below):

Trend #1: Global demand has reached an inflection.

Global net absorption accelerated to 436 MSF on a seasonally adjusted annual basis in the second half of 2025, rising from a pace of 393 MSF in the first half of the year.

As potential trade policy outcomes narrowed throughout 2025, large users reengaged in leasing negotiations. This expression of pent-up demand accelerated strategic decisions to consolidate and modernize operations and pursue build-to-suits, benefiting newer large-format facilities disproportionately. Improving demand conditions moderated rent declines, even in markets with still-high vacancies such as Spain, Dallas, and the Southwestern U.S., with some markets even seeing moderate growth.

Rents declined as landlords competed for customers, with the sharpest declines in the U.S./Canada at -4.9% year over year. Outside of the U.S./Canada, rents declined more modestly, only -2.3%.

Trend #2: Cost-sensitivity persisted, driving tenants to prioritize leasing in less expensive markets.

Macro uncertainty and expensive capital caused businesses to scrutinize costs across the supply chain, particularly as operating costs beyond warehouse rent escalated sharply in recent years (e.g., property taxes, insurance and labor). In some global markets, operating expenses rose 20% year over year in 2024, equal to about 20% of gross rent.

A pullback in triple-net rents in high-cost gateway and Last Touch® markets is luring back some large customers with flexible balance sheets, but many businesses continued to consider alternative locations depending on use case and related supply chain costs like labor and transportation.

Trend #3: Supply constraints are reinforcing the value of existing logistics space.

Replacement-cost rents are approximately 20% above market rents globally, making speculative projects unviable in most locations. In 2026, global completions should fall to their lowest level since 2018 at 474 MSF. In the U.S., completions should fall to their lowest level in a decade. Especially in Europe, grid constraints have emerged as a new barrier to supply, compounding longstanding land and regulatory limitations. Fewer deliveries should result in occupancy gains and push rents higher.

Trend #4: Demand-drivers tracked more closely with patterns of rent growth.

Manufacturing-heavy regions in Mexico, Canada and China faced rental headwinds from uncertainty around tariffs. U.S. gateway markets repriced on elevated operating costs even as new supply remained very limited and trade stayed healthy, with import volumes in U.S. gateway markets in line with 2024 levels and approximately 4% higher than the 2021–2024 average. 

Despite policy uncertainty, global consumption remained stable, and retail sales grew by 2.0% globally. E-commerce expansion led sales growth at 6.3% year over year, outperforming offline by 430 bps.5. Expansion of consumption-related demand was particularly prominent in demographics-driven geographies, such as Mexico City, the U.S. Sunbelt and Spain.

"A new cycle is kicking off. Early growth phases from recent prior cycles look similar, with flight-to-quality and larger customers in larger spaces leading demand. Supply has eased, demand is accelerating and broadening; and the bottom for rents is forming. As a result, Prologis Research expects moderate global rent growth in 2026 with variability by location, size and quality," the report concludes.