State of the CRE Market: Industrial Sector Remains Strong Amid General Volatility
Published: June 24, 2025
In the NBC Show “30 Rock,” Tina Fey’s character, Liz Lemon, remarks to her boss Jack Donaghy (played by Alec Baldwin), “What a week, huh?” He promptly replies, “Lemon, it’s Wednesday.” This sentiment summarizes the mood of a lot of us lately, as current events seem to be throwing new twists and turns at a breakneck pace. In just half a year, we’ve seen multiple armed conflicts, international trade wars, persistent inflation, political assassinations, confrontational protests and riots, and devastating natural disasters. These incidents have led to significant volatility in the stock market and a general feeling of uncertainty among consumers both domestically and abroad.
This must mean the industrial real estate market is also seeing extreme volatility, right? According to local experts, this is not the case. Recently, as part of our continuing series profiling industry segments, I sat down for a conversation with Sean Merold, Senior Vice President at CBRE. Sean specializes in leasing and sales of industrial properties throughout Sacramento and Northern California. Sean has been an industrial real estate broker in Sacramento since 2008 and has participated in over $1 billion in sales and lease transactions in his career. As an industrial expert (and a fellow UCLA Bruin), I thought Sean would be the perfect person to comment on the state of the industrial sector.
According to Merold, the industrial market remains strong, seeing steady demand, increasing rents, and consistent touring activity. Projects that have been in development are starting to hit the market, including many speculative builds for which tenants are needed. New development is tapering off, but this which appears to be driven more by the lack of available land as opposed to a lack of overall demand. The biggest drivers of tenant demand include third-party logistics, food, automotive, and energy users, though larger requirements have slowed (tenants over 100K SF). Owner-user sales continue to pace the market, as well as properties with excess yard space.
Perhaps most surprising from my discussion with Merold was his perspective that tariffs, thus far have not had a significant impact on the local industrial market. In the industrial sector, where international transactions direct products through the supply chain to local distribution networks, increased costs could be expected to curtail demand and increase prices. Though building costs continue to increase, the effects of tariffs have not correlated with a reduction in demand for space, even if decisions to lease or buy have been delayed with many tenants taking a “wait-and-see” approach. The market is not exploding by any means, but steady improvement is projected for the remainder of 2025 and into next year.
Since the outbreak of COVID in 2019, the industrial sector has been the darling of the commercial real estate market. Multifamily has struggled with higher interest rates, retail has seen fits and starts, and office has been slow to climb back, but industrial demand has seen sustained success. This is perhaps best evidenced by Merold’s fellow industrial colleague and CBRE Executive Vice President, Todd Sanfilippo, winning Broker of the Year at the recent Association of Commercial Real Estate (ACRE) event. Though the world around us may be experiencing historical events at a rate faster than Liz Lemon can tolerate, the industrial market provides a strong, steady escape that should continue to lead the local commercial real estate market for the indefinite future.