Many real estate asset classes have become more difficult to underwrite. Office leasing is still stabilizing, and retail continues to stratify. Industrial real estate stands out as a resilient asset class in the commercial sector, making it one of the most strategic options for borrowers and lenders in this environment.
A unique combination of stability, scalability and transparency sets industrial properties apart. Brokers working day-to-day in the field see firsthand how these qualities support deal flow and reduce risk. Operational realities and strategic advantages make industrial assets an increasingly attractive investment for financial professionals and their clients.
While rising vacancy rates have drawn scrutiny to the industrial sector, broader data affirm its long-term resilience and appeal. According to Colliers’ second quarter 2025 U.S. Industrial Market Report, the national vacancy rate climbed to 7.3%, marking the 12th consecutive quarter of increases. A backlog in new supply and tenant move-outs drive this trend rather than a collapse in demand. Net absorption has remained positive, extending a 15-year streak of continuous quarterly occupancy growth.
Leasing activity is holding steady across core logistics markets. Dallas-Fort Worth led the nation in net absorption with 6.4 million square feet, followed by Chicago at 5.1 million. Even in regions where absorption dipped, such as Houston and Phoenix, leasing volumes are expected to stabilize as construction pipelines taper. New development starts have declined 60% from their fourth quarter 2022 peak, reducing future supply risk and helping rebalance the market.
Meanwhile, asking rents continue to rise. Warehouse and distribution rents increased nationally by 4% year over year to $10.54 per square foot. Several non-coastal and Southern markets are still posting gains, with Dallas-Fort Worth up 7% and Chicago up 5%. These pricing trends reinforce the attractiveness of industrial properties from a valuation and income perspective, especially for owners and lenders focused on long-term stability.
Consistent leasing demand, moderating development activity and sustained rental growth make this sector one of the most defensible positions in commercial real estate.
Clearer use cases
A primary advantage of industrial transactions is they tend to be straightforward. Tenants typically understand how they will utilize the space, whether for manufacturing, distribution or storage purposes. That clarity enables precise underwriting and facilitates borrowers’ ability to present lenders with a compelling business case.
In office deals, borrowers often make assumptions about tenant demand, lease-up timing or interior build-outs. In the industrial sector, those variables are usually more defined upfront.
Operational clarity also leads to more confident decision-making during acquisitions. When business owners identify an industrial property that fits their operations, they can move quickly. That decisiveness supports momentum through the financing process and reduces timeline uncertainty.
One of the most active segments of industrial buyers remains owner- occupants. These users aren’t purchasing properties for speculation but to support the core needs of their businesses. As a result, they tend to have high conviction in the deal and a vested interest in maintaining the property.
That conviction translates into stable borrower profiles for lenders. Many owner-occupants operate from the same leased facility for years. A warehouse client might lease for a decade before getting the opportunity to buy. With a proven business model and no uncertainty about the property’s location or functionality, leasing clients easily become owner-occupants at the right time to buy.
Typically, owner-users are not looking to max out leverage. Instead, they seek predictable payments, operational flexibility and opportunities for long-term appreciation.
Industrial asset benefits
As investment properties, industrial buildings are often backed by long-term, creditworthy tenants. Lenders can evaluate tenant risk easier than in sectors like retail or office, where occupancy can fluctuate based on market sentiment or macroeconomic changes.
Tenants are frequently small to midsize businesses that occupy properties for long terms. They customize a facility to their needs, train their workforce around its location and integrate it into their supply chains. That stickiness results in lower turnover and fewer surprises during ownership.
For lenders, the predictability of cash flow, especially with triple-net leases, can make financing these properties more attractive and secure.
Another reason industrial assets work well for financing is the widespread use of triple-net lease structures. In triple-net industrial leases, the tenant not only pays rent but also the taxes, insurance and maintenance costs associated with the property.
This model limits the owner’s operating exposure and enables cleaner financial modeling. When a borrower presents an industrial deal to a lender, the expected costs and returns are more easily quantifiable.
Variable costs can undermine confidence in long-term projections. That makes triple-net leases important to help lenders evaluate net income with greater accuracy, supporting more aggressive lending terms and expediting loan approval.
Strong demand signals
Despite higher interest rates and broader economic volatility, demand for industrial space remains elevated in many markets. The growth of e-commerce, nearshoring and last-mile delivery has created an ongoing need for warehouses, distribution centers and manufacturing facilities.
Even local businesses are expanding industrial footprints as they outgrow older buildings or diversify into new service areas. In Houston, users are extending their reach along highway corridors to access more affordable land and improved logistics access. It’s not uncommon to see businesses move from first-generation products into newly constructed shell spaces.
This sustained demand has helped keep vacancy rates low, particularly for functional Class B properties in strong locations. Borrowers acquiring these properties, whether for owner-occupancy or investment, often demonstrate a realistic plan for leasing, repositioning or holding the asset through market cycles.
While new industrial development is ongoing, many business owners prefer to purchase existing buildings as constructing from scratch has become increasingly complex and time-consuming.
Construction timelines have lengthened because approvals take longer, hard costs remain elevated and interest rate volatility can disrupt financing plans midstream. Many borrowers acquire existing buildings faster to access space without the uncertainty of development. Brokers working in this space often guide clients through both paths — development versus acquisition — and see stronger conviction around the latter in the current cycle.
For most users, this route delivers greater efficiency and cost savings without compromising functionality. That preference is meaningful for mortgage originators and bankers. It signals where the market is going and helps focus their pipelines on transactions with higher close rates.
Deals still happening
While interest rates have impacted commercial deal volume, industrial real estate continues to attract active buyers, particularly when the acquisition supports operational efficiency.
Brokers are seeing a shift in expectations, however. Buyers were previously focused on interest-only loans or low cap rates. They’re still pursuing acquisitions, but with different financing assumptions. This shift is an opportunity for lending professionals to step in with strategic solutions.
Owner-occupants in particular are looking for lenders who understand their operations and can underwrite based on long-term business fundamentals rather than just interest rate sensitivity.
For brokers and bankers, this means taking a more consultative approach to lending. Help borrowers understand their options, provide realistic timelines and walk them through the underwriting process. This can make the difference between stalled deals and successful closes.
A borrower may be able to secure an in-demand property by getting in front of the lender early with the help of the broker. If the lender’s approved due-diligence vendors are used, the deal may move quickly, allowing the team to succeed in competitive situations. The ability for lenders, brokers and borrowers to act as one coordinated team makes smooth transactions possible.
Deals are out there. Borrowers need proactive lending partners to help get them done. Mortgage professionals who understand the facets of industrial assets (loading types, site layouts, tenant retention and lease structures) will be better positioned to serve their clients and capture repeat business.
Even simple changes can have a significant impact. Walking the property with the broker and borrower, for example, helps originators better understand the deal and can improve communication throughout the process.
Lenders, borrowers and real estate brokers each bring a valuable perspective to the table. When they work together from the outset, deals are smoother, timelines are faster and outcomes are stronger. In an environment where every transaction matters, industrial real estate offers a dependable path forward for commercial lending professionals. The demand is real, the fundamentals are sound and opportunities are waiting.
