If you own or manage commercial properties, you know how important it is to stay on top of market trends. Cushman & Wakefield’s Q3 2025 MarketBeat reports for industrial, office, and retail real estate are out, and they reveal how each sector is performing and changing. Let's break down the key trends in each sector and, more importantly, what you should do about them. 

The good news is that industrial demand is surging, office markets are beginning to stabilize, and retail is showing resilience despite economic headwinds. 

Industrial Sector: Strong Demand and Steady
Fundamentals in Q3 2025

The industrial real estate sector continued its upswing in Q3 2025. Demand for warehouse and logistics space improved for the second quarter in a row, signaling robust activity in this sector. In fact, 45.1 million square feet of industrial space were absorbed (occupied) in the third quarter alone – a 30% jump from the previous quarter and 33% higher than a year ago. Year-to-date net absorption reached 108 million sq. ft., basically on par with the same period in 2024.

This was the strongest demand reading in over a year, with about two-thirds of U.S. industrial markets seeing positive occupancy growth in Q3. Markets like Dallas–Ft. Worth, Indianapolis, and Houston led the pack with significant space taken up by tenants expanding their logistics operations. Even some areas that had seen move-outs earlier in the year turned positive this quarter, highlighting a broad-based resilience in industrial real estate demand.

Importantly for you as an industrial property owner, vacancies held steady despite all this new leasing. The national industrial vacancy rate remained at 7.1% in Q3 2025, unchanged from the prior quarter This stability is partly because new supply has slowed down – only 63.6 million sq. ft. of new industrial space was delivered in Q3, the lowest quarterly volume in eight years. With construction cool­ing off, the market isn’t being flooded with empty new warehouses, so existing space is getting filled without driving vacancies up.

Today’s 7.1% vacancy is only slightly above the pre-pandemic average (around 6.8%), meaning the market is still relatively tight by historical standards. Rent growth has also moderated but remains positive: asking rents for industrial space now average $10.10 per square foot, up about 1.7% from a year ago. Nearly 60% of U.S. markets saw year-over-year rent increases, and a handful of hot markets even notched double-digit rent growth. In short, industrial landlords are generally still able to raise rents, though not as rapidly as last year. This cooling of rent hikes – from around 4% annual growth in 2024 to under 2% now – suggests tenants are a bit more price-sensitive, but overall demand is keeping rents on an upward track.

What should you do? With industrial demand so strong, now is a prime time to review your leasing strategy and property offerings. Tenants, especially large corporate logistics users, are consolidating into newer, more efficient facilities to optimize their supply chains. Buildings constructed since 2020 have gained a whopping 196 million sq. ft. of occupancy this year, while many older, less functional warehouses collectively lost 88 million sq. ft. of tenants. This flight-to-quality means you should highlight any modern features your properties offer (high ceiling clearance, advanced loading docks, energy-efficient systems, proximity to transport routes, etc.). 

If you own older industrial buildings, consider investing in upgrades or retrofits to meet current tenant expectations. Even simple improvements like better lighting, updated safety systems, or reorganized layouts for smoother truck access can make a difference in retaining and attracting tenants. 

What This Means For
Tenant Relations And Operations In Industrial

Industrial tenants care about efficiency and uptime. In other words, the “tenant experience” in a warehouse is about smooth operations. You can enhance this by ensuring your building is always in top working order. Promptly address maintenance issues like roof leaks or faulty dock doors so they don’t disrupt your tenant’s business. Using an industrial property management software streamlines how you manage your buildings—keeping maintenance schedules, work orders, and tenant requests organized in one place. It automatically alerts you when equipment needs servicing or when issues arise, helping you stay proactive and prevent costly downtime.

An all-in-one property management software streamlines how you oversee industrial buildings by connecting day-to-day operations, tenant needs, and maintenance tasks in one place. Its building maintenance software tools make it easy to schedule and track preventative work on critical systems, reducing downtime and keeping equipment in top condition. With building operations software, your team can monitor tasks, inspections, and service requests in real time—ensuring every part of your facility runs smoothly and tenants experience a reliable, well-managed space.

Office Sector: Quality Buildings Lead a Slow
but Steady Recovery

The office sector in Q3 2025 is showing signs of a tentative recovery after a long challenging period. While many offices have struggled in recent years, the latest data indicates that conditions are finally improving in a meaningful way. A key trend is the outperformance of high-quality office buildings. Companies have spent the past few years shrinking their office footprints, but now some are cautiously expanding again – primarily in top-tier, Class A buildings. In fact, Class A office space saw net occupancy growth for the second consecutive quarter. Over the past four quarters, Class A offices nationwide gained over 3 million square feet of tenants, the first time we’ve seen an annual positive absorption figure that large since early 2020. 

This shows that many employers are doubling down on offices that offer great locations, amenities, and modern work environments to entice employees back on site. Meanwhile, the broader office market is also healing: about half of U.S. office markets had positive absorption in Q3 (meaning they leased more space than was vacated), which is a notable improvement from just two quarters ago when only one-third of markets were gaining tenants. This wider demand is a promising sign that the office slump is easing beyond just a few gateway cities.

That said, the office market isn’t out of the woods yet. Overall occupancy was still slightly down in Q3 – net absorption was approximately -4.3 million sq. ft., marking the 13th straight quarter where more office space was emptied than filled. The fact that it’s still negative might sound concerning, but context matters: the pace of space give-backs has slowed significantly, and the pain is concentrated in a handful of weak markets. In Q3, 46 out of 92 tracked office markets actually saw occupancy increase, and if you exclude the five weakest markets, the country as a whole would have eked out a small gain in occupied office space. In other words, the recovery is uneven but growing broader each quarter. 

Another encouraging trend for owners is on the supply side: new office construction has dropped off dramatically. Only 7.1 million sq. ft. of new office space opened in Q3, which is 30% below the quarterly average of recent years. Year-to-date, just 13.4 million sq. ft. has been delivered, roughly half of last year’s pace and the slowest first three quarters for new offices since 2012. Moreover, hardly any new projects are breaking ground now. 

The amount of office space under construction (22.5 million sq. ft.) is the lowest in the 21st century, equating to a mere 0.4% of total office inventory. For comparison, back in 2020 the pipeline was 2.6% of inventory. This construction slump means that few brand-new competitors will enter the market in the near term, which actually helps existing buildings. 

With less fresh supply, tenants needing quality space may start looking again at well-located older buildings, especially as their options in new builds dwindle. Cushman & Wakefield notes that this lack of new supply should support higher occupancy in coming quarters by giving the market time to absorb vacant space.

What’s The Strategy For Office Landlords? 

The clear message from Q3 is that quality and experience are driving the office rebound. If you own a high-quality (Class A) office building, lean into that advantage. Companies are specifically seeking out offices that can help them boost in-person attendance and improve employee satisfaction. They want prime locations and the “right mix of amenities and services” for today’s workforce. Take a fresh look at your building’s amenities and tenant services: 

Do you offer things like modern common areas, flexible collaboration spaces, good ventilation and air quality, on-site food or fitness options, or even programming such as tenant networking events? These extras can differentiate your property. It’s also a great idea to deploy a tenant experience platform, essentially a mobile app or portal for your building that allows tenants (and their employees) to easily engage with what you offer.

For instance, a tenant experience app lets people reserve conference rooms or amenity spaces, receive updates about on-site events or services, and submit requests (like a temperature adjustment or security escort) in seconds. By making your building more convenient and enjoyable through such a platform, you directly address companies’ goal of enhancing employee experience in the office. This in turn helps your leasing: happy tenants are more likely to renew, and prospective tenants will hear that your building is a place where their staff will actually want to come to work.

For owners of older office buildings, the data signals a need to reposition and reinvent. With half of U.S. office buildings now fully occupied (largely the better-quality half), most of the vacancy is piling up in aging or “competitively obsolete” buildings that aren’t meeting today’s tenant expectations. To attract tenants in this climate, consider upgrades that can elevate your building’s class and functionality. This could range from aesthetic improvements (lobby renovations, updated elevators) to tech and sustainability upgrades (high-speed connectivity, smart HVAC systems, touchless entry, green certifications). Even relatively small improvements like improved lighting, refreshed restrooms, or a new shared lounge can make a difference in how a tenant perceives your property. 

Retail Sector: Resilience Amid Economic Uncertainty and Evolving Consumer Trends

The retail real estate sector in Q3 2025 demonstrated a cautious resilience. After a rough start to the year, demand for retail space stabilized in the third quarter. Net absorption, which had been negative in the first half of 2025 due to a wave of store closures, actually turned slightly positive in Q3, at about +323,000 square feet nationwide. While that’s not a huge number, it’s an important inflection indicating that overall occupancy in shopping centers is holding steady for now.

Year-to-date absorption is still -13.1 million sq. ft., so the market has lost more space than it gained in 2025, but the Q3 uptick means the bleeding has effectively stopped for the moment. If the fourth quarter doesn’t see a big surge in occupancy, 2025 will go down as the first year since 2020 with net negative demand for retail space – but the fact that Q3 was flat-to-positive is a hopeful sign that we may be near the bottom of this cycle.

One big factor weighing on retail real estate this year has been economic uncertainty, including shifts in trade policy. In 2025, new tariffs were introduced on various goods, creating unpredictable cost pressures for retailers. These tariffs have started to raise prices for imported consumer products (for example, prices for furnishings, electronics, and apparel climbed around 5.0% since the tariffs hit in spring) and have increased operating costs for retail businesses.

The question is how much this will dampen retailers’ expansion plans or consumers’ spending. So far, the impact on leasing appears limited. Much of the space give-back earlier in the year came from previously announced store closures (including about 15 million sq. ft. of big-box space from two major chains that went bankrupt in 2024), rather than new fallout from tariffs. And encouragingly, retailers as a whole did not accelerate downsizing in Q3.

The national retail vacancy rate held at 5.8%, the same as in Q2. This is only 0.5 percentage points higher than a year ago (vacancy was 5.3% in Q3 2024, now 5.8% in Q3 2025), which implies that while we did see some increase in empty stores earlier in the year, the situation has stabilized for now. A 5.8% vacancy rate is still quite low in historical terms – retail space is tighter today than it was in most of the past decade.

 In fact, in Q3, vacancies decreased in 32 out of 81 U.S. retail markets, indicating many local markets saw improving conditions. Some of the strongest markets were places like Reno, NV (vacancy down 0.6% in the quarter) and several Sunbelt cities including Houston and Orlando, which all saw nice vacancy drops as local demand grew. And consider that in nine markets the vacancy rate is below 4%, which is extremely low notably Raleigh/Durham, Miami, and Nashville are among those tight markets with very scarce retail space available. This shows a real split: while some areas are dealing with store closures, other areas have retailers competing for limited space.

Looking ahead, retail property owners should be prepared for a few more bumps on the road, but also recognize the sector’s underlying strengths. Economists at Cushman & Wakefield do not predict an official recession in their baseline forecast, but they do warn that downside risks are elevated. Job growth has cooled and consumer confidence has softened, which usually makes shoppers more cautious. 

We’re already seeing consumers become more discerning with their spending – since early 2025, growth in consumer spending has been modest (real consumer expenditures rose less than 1% from March to July), and people are cutting back on non-essentials and big-ticket purchases. This likely means certain discretionary retail categories (like luxury fashion, high-end electronics, or hobby goods) could face slow sales and, by extension, slower store expansions in the next few quarters. So we may not get a broad-based retail leasing surge in the near term. 

However, there’s a silver lining: very little new retail space is being built, and space in prime locations remains hard to find. The limited new construction, combined with low availability in the most desirable shopping locations, should put a floor under how far the market could soften. Essentially, even if retailer demand isn’t booming, the supply side is constrained – developers aren’t adding much new mall or shopping center space, and many of the best trade areas are close to fully occupied. 

As a result, we expect retail real estate metrics to continue reflecting a historically tight market (vacancy hovering in the 5-6% range nationally) even if they’re a bit less buoyant than the pre-tariff, pre-pandemic era. For you as a property owner, this means we’re in a moment of equilibrium: not a landlord’s market of rapid rent growth and surging expansions, but not a tenant’s market of massive store pullbacks either. It’s a time for steady hands and smart management.

What This Means For Retail Property Owners

In an environment like this, flexibility and proactive management are your best friends. Start with your leasing strategy. If your shopping center or retail property is in one of those tight markets (say, a booming suburban area in the Sunbelt with sub-4% vacancy), you likely still have the upper hand. Quality tenants will be keen to secure a spot, so you can maintain confidence in your rental rates, though remember, rent growth nationally has slowed to about +1.7% year-over-year, so temper expectations of big hikes. 

It might be wise to lock in longer lease terms with reliable anchor tenants now, before interest rates or other economic factors change the game. Conversely, if you have vacancies or you’re in a location that was hit by a major store closure, consider creative leasing approaches to fill space. Shorter-term pop-up leases or incubator opportunities can keep your occupancy up and property active. 

For example, if a large department store closed in your center, you might not immediately find another single tenant to take all that space. Instead, you could divide it for multiple uses, perhaps a mix of a discount retailer, a fitness center, or even non-retail uses like medical or educational facilities which are increasingly backfilling retail boxes.

Filling even part of a big vacancy will generate foot traffic that helps your remaining stores. Also, think about tenant mix carefully: retailers selling staple goods or offering essential services (grocers, pharmacies, convenience stores, budget-friendly brands) tend to be more “recession-resistant” and could be solid bets for new leases in uncertain times. 

In contrast, if you rely heavily on purely discretionary retailers, you might want to diversify to include entertainment, dining, or experiential concepts that give people a reason to visit. Many consumers are seeking experiences, not just products, so tenants like boutique fitness gyms, family entertainment centers, or artisan food halls can drive traffic and complement traditional shopping.

Keeping your existing tenants happy and solvent is absolutely crucial now. Open communication is key. Talk with your retailers regularly to understand how their business is faring. If some smaller tenants are struggling due to higher costs (like inventory costs rising from tariffs) or weaker sales, you might work out a plan to help each other. 

Sometimes coordinating joint promotions or events can boost everyone’s fortunes. Could you organize a “Shop Local Festival” weekend, a holiday market, or special community events at your center? Such efforts can drive foot traffic to your tenants’ stores. Utilizing a retail property management software designed for retail properties can facilitate this coordination. Through a tenant portal or app, you can share event calendars, marketing materials, and even gather feedback from your retailers about what support they need. It also provides a direct line for tenants to communicate any issues (like maintenance concerns or security needs), which you can respond to quickly. Showing tenants that you’re invested in their success builds loyalty, they’ll be more likely to renew leases and less likely to go dark even if business gets tough, because they see you as a partner rather than just a landlord.

Navigating Q3 2025 Trends: Stay Proactive and
Embrace Innovation

Understanding Q3 2025 market trends is only the beginning, and the real advantage comes from acting on them. Across industrial, office, and retail sectors, the properties that lead prioritize efficiency, quality, and experience. Industrial demand remains strong for modern, well-located assets. Offices are rebounding as tenants return to collaborative, engaging spaces. Retail centers are thriving through partnerships that attract shoppers and build loyalty. The most successful operators stay proactive, using data to refine strategies and adapt quickly to changing market conditions.

An all-in-one commercial property management software that combines building maintenance software, building operations software, and a tenant experience platform helps owners and operators manage every aspect of their portfolio from a single system. It streamlines maintenance scheduling, work orders, and inspections while simplifying communication, automating daily workflows, and giving teams real-time visibility across every property. By consolidating these tools, you improve efficiency, strengthen tenant relationships, and maintain consistently high performance across your portfolio.

A well-run building creates lasting value. Tenants notice when their spaces are comfortable, reliable, and easy to interact with, and those positive experiences lead to renewals, referrals, and long-term success. Staying flexible, data-driven, and focused on operational excellence ensures your properties remain competitive no matter how the market shifts.

That is where Cove helps. Cove unifies property management, maintenance, operations, and tenant experience into one intuitive platform that empowers owners and operators to simplify workflows, enhance tenant satisfaction, and stay ahead in any market.