U.S. Warehouse Investment 2025: Is It Still Worth It?

The Fed kept rates at 4.25%–4.50% in July 2025. With debt costs elevated, warehouses can no longer be judged by leverage alone—cash flow, lease stability, and location now drive decisions.

By June, average U.S. warehouse rents hit $8.60/sf (+6.2% YoY), while vacancies rose to 9%. Tenants, not landlords, increasingly hold the upper hand.

Construction has slowed: only 71.5M sf delivered in Q2, the lowest since 2019. Developers are cautious, opening room for tenants to negotiate longer free rent, tenant improvements, and more favorable lease terms.

Regional splits are clear:

• Los Angeles core: 4.8% vacancy—high for the market, but still resilient.

• Inland Empire: 6.7%–7.9% vacancy, showing greater sensitivity.

• Dallas: prices fell from $152 to $108/sf, offering value but also vacancy risk.

Capital has turned defensive. In July, Brookfield acquired 53 warehouses for $428M—96% occupied, mature locations, stable tenants. Predictable income trumps speculative growth.

NAIOP forecasts 156M sf of absorption in 2025, pointing to a slower but steady market.

👉 Bottom line: In a high-rate cycle, warehouse investment is no longer about chasing appreciation. It’s about resilient cash flow, prime locations, and disciplined deal structures.