Warehouse Space Tightens as Vacancy Rates Hit Decade High, ITS Logistics Reports

The latest Q2 ITS Logistics US Distribution and Fulfillment Index, powered by Cresa, paints a complex picture of the current warehousing and logistics landscape. With vacancy rates climbing to 7.1%, the highest since 2014, and warehousing capacity contracting for the first time in over a year, the market is facing significant pressures. These challenges are compounded by rising inventory costs, which have surged to 80.9 on the Logistics Manager Index, the highest in over two years, driven by increased labor, storage, and insurance expenses.

Ryan Martin, President of Distribution and Fulfillment at ITS Logistics, emphasizes the urgency for shippers and logistics providers to secure operationally viable space. ITS Logistics highlights the anticipated intensification of capacity and cost pressures with seasonal inventory builds and consumer demand later this year. The report also notes a 5.1% drop in the Producer Price Index for Warehousing and Storage from March, reflecting softened pricing power for warehouse operators amidst these challenges.

Broader industrial market trends echo these findings. According to Cushman & Wakefield’s Q2 2025 U.S. Industrial Market Report, new completions have dropped to a five-year low, and average asking rents have seen the slowest growth since early 2020. The Wall Street Journal corroborates that warehouse vacancy levels are at their highest in over a decade, with much of the available space being outdated or poorly located for modern supply chain needs.

Despite these challenges, the Logistics Manager Index indicates a steady pace of continued expansion, with warehousing utilization remaining strong at 62.2. However, the bifurcation of demand and the normalization of inventory levels post-tariff-driven stockpiling surges suggest a complex road ahead for the industry. With U.S. goods imports experiencing the largest single-month drop since 1992 and average warehouse wages now exceeding $19 an hour, the sector is at a critical juncture.

The ITS Logistics US Distribution and Fulfillment Index serves as a vital tool for stakeholders navigating these turbulent waters, offering insights into regional markets and forecasts to optimize warehousing and delivery costs. As the industry moves forward, the ability to adapt to these evolving dynamics will be paramount for shippers, retailers, and logistics providers alike.