A report recently issued by industrial real estate firm Colliers examined various factors related to how various factors are currently impacting North American big-box industrial space.

The report, entitled “North American Big Box Industrial Overview,” observed that going back to 2020, the largest North American markets for big box industrial space—which includes modern distribution and warehouse buildings that are 200,000 square-feet or more and with ceiling heights at least 28 feet clear—have added what it called an unprecedented 1.3 billion SF (square-feet) of new supply, expanding the big-box market rate by nearly 50%.

And it added that even though pandemic-driven demand previously drove vacancy rates down to nearly zero in some markets, there has been a “recent wave” of new supply coupled with demand falling below pre-pandemic levels that has subsequently resulted in increasing vacancies.

Looking at net absorption, which Colliers said is a key measure of demand for industrial space, the report said it came in at 101 million SF in 2024, down 34% annually and down 72% compared to 2021 when it was at 356 million SF. What’s more, it noted that more than half of 2024 net absorption was in buildings 750,000 SF or larger, whereas demand in buildings between 500,000 SF-to-749,999 SF was the weakest. For the same period, Colliers said that 202 million SF of big-box firm was developed—doubling the amount of demand, according to Colliers—and 38% below the 2023 record or 329 million SF, with the firm saying that the market has not regained balance.

Craig Hurvitz, Director, National Industrial Research, for Colliers, told LM that there has recently been a shift away from building 750,000+ SF buildings, with developers favoring smaller footprints instead.

“Although this size category had the highest vacancy rate a year ago, several major leases were signed in 2024, leading to a decline in vacancy due to the limited addition of new supply in this segment,” said Hurvitz.

Colliers observed that the drop-off in net absorption led to an 80 basis points annual vacancy gain in 2024, to 11%, with vacancy rates the highest in buildings between 500,000 SF-to-749,999 SF, at 11.7%, and buildings 750,000 SF or higher, at the lowest end, coming in at 10.2%, falling 159 basis points in 2024.

Looking at 2025 vacancy rates, Hurvitz said that vacancy is expected to peak in 2025, as new supply declines to levels below those seen before the pandemic and begins to align more closely with demand.

“A rebound in occupier activity could drive vacancy down faster than expected, while weaker demand may keep it elevated longer,” he said. “The upside is that big-box development is well below the highs of 2022 and 2023, placing a natural limit on how much higher vacancy can rise.”

When asked what needs to happen to get big-box industrial space rent growth back to 2022-2023 levels, Hurvitz pointed out that big-box rents grew by more than 20% year-over-year in 2022 — an unprecedented increase for the U.S. industrial market.

“A similar spike is unlikely moving forward, unless demand outpaces expectations and vacancy dips below 4% nationwide once again,” he said.