Big Boxes Regain Ground in Warehouse Leasing

Article originally posted on Commercial Property Executive on March 17, 2026

Demand is increasingly shifting toward inland and lower-cost markets.

After slowing down in 2023 and 2024, leasing demand for warehouses of 500,000 square feet or larger bounced back sharply in 2025, most notably in the second half, according to new research from Cushman & Wakefield.

Their Large-Format Deals Return report found that those larger deals surged by 32 percent year-over-year, and that third-party logistics providers (3PLs) and manufacturers accounted for almost two-thirds of that. Overall, net absorption totaling 113 million square feet occurred in newer, larger warehouse and logistics facilities, representing 64 percent of the total nationwide.

The report attributes much of that activity to consolidation, as occupiers left multiple smaller, outdated buildings and regrouped into modern Class A facilities with higher clear heights, greater power capacity and updated infrastructure supporting automation and robotics, consistent with broader industrial market trends.

In turn, this flight to quality is driving more build-to-suit activity, with tenants seeking to customize their new facilities for long-term efficiency.

“Build-to-suit development rose 11 percent in 2025, and nearly one-fifth of all leasing activity above 500,000 square feet was tied to build-to-suit projects,” Cushman & Wakefield reported. “Large build-to-suit projects currently underway increased 14 percent year-over-year, positioning them as a key driver of net absorption in 2026.”

This focus parallels an ongoing cost sensitivity. Most (71 percent) of the 104 large leases signed in 2025, were in markets priced below the national average rent, with nearly two-thirds in markets at least 20 percent cheaper than the U.S. average, the report stated. “As a result, demand is moving increasingly toward inland and lower-cost markets, and away from higher-priced coastal and port-adjacent locations.”

Nationwide, vacancy for large warehouses dropped by 140 basis points year-over-year; meanwhile, user-purchase activity reached 36.7 million square feet in 2025, a level that the report calls “the highest … of the decade.”

Putting 2025 into context

Jason Price, head of logistics and industrial research at Cushman & Wakefield Americas, fleshed out a couple of key areas for Commercial Property Executive, the first being the tradeoffs of cheaper, inland locations versus pricier sites closer to coastal ports.

“Many of these (inland) facilities are designed to function as regional distribution centers serving multiple population hubs rather than a single market,” he told CPE. “Because of that, they do not need to be located directly in port markets. What matters more is being within a few hours’ drive of the key population bases they serve.”

Price added that at the same time, there is still strong demand for last-mile and smaller distribution facilities in port markets. “These buildings play an important role in staging goods that have just arrived by ship and in supporting fulfillment operations closer to end consumers,” he said.

The second question was why there was such a sharp drop in large leases in late 2024. In other words, what was the market in 2025 rebounding from?

Price remarked that leasing activity in 2024 was generally softer and fell to a six-year low, so several size segments experienced slower deal velocity. He added that transaction timelines also became much longer as tenants focused heavily on cost containment and operational efficiency. “At the same time, they had more options available in the market, which allowed them to be more deliberate in their decision-making. Uncertainty in the second half of the year and the higher cost of capital also contributed to the pause in activity,” Price said.

“By May and June of 2025, corporate occupiers began to regain confidence,” he concluded. “With rents softening in some markets and more negotiating leverage available, many tenants moved forward with deals to take advantage of the more favorable conditions.”