New JLL report highlights strong Q3 industrial leasing activity

Amid what it called ongoing economic and trade headwinds, a report recently issued by Chicago-based industrial real estate firm JLL pointed to signs of recovery in industrial leasing activity in the third quarter.

The report, entitled “JLL’s U.S. IND Market Dynamics Q3,” stated that third-quarter leasing volume reached 146.2 million square feet (MSF), marking the highest level of leasing activity since the first quarter of 2024 (and 387.1 MSF year-to-date). What’s more, it added that third-party logistics (3PL) service providers again represented the top industry in terms of leasing activity, accounting for 19.2% of all leasing.

“The increase in leasing was largely driven by pent-up demand and delayed decision-making from occupiers coming to a head,” said Elizabeth Holder, Senior Research Analyst, Industrial, JLL. “I think this is also why we’ve seen such an increase in 3PL leasing—because those that aren’t ready to commit to a physical footprint are more likely to sign a contract with a 3PL for two to three years while the tariff and trade landscape plays out.”

Third-quarter net absorption doubled, according to the report, coming in at 38.26 MSF, with the year-to-date total at 101 MSF. It also noted that 20 markets each recorded at least 1 MSF of positive net absorption, driven by owner-user sales and build-to-suit projects taking occupancy.

Holder explained that this did not come as a surprise, given that the previous quarter represented the lowest figure JLL had seen since 2014.

“Additionally, since we have seen an uptick in owner-user and build-to-suit buildings, there has been some baked-in positive absorption that isn’t fully realized until those projects are delivered,” she said. “This trend will likely bolster our absorption figures through the end of the year.”

Looking at the development timeline, JLL observed that it increased in the third quarter for the first time in 12 quarters, reaching 246.8 MSF—up 6% over the second quarter—with more build-to-suit projects coming online and breaking ground.

“I think we are going to continue to see the pipeline shift in a meaningful way,” said Holder. “It’s important to keep in mind that over 1 billion SF was brought to market in a very short amount of time. Additionally, we have quite a few markets with new, vacant product on the ground, so until those numbers start to decline, I wouldn’t expect huge jumps in new speculative development.”

JLL noted that manufacturing sector leasing continued to grow, up for the third consecutive quarter and rising 330.1% year-over-year—a “dramatic” increase—driven by expanding supplier networks prioritizing domestic manufacturing capacity. It also said that manufacturing tenants are increasingly seeking larger-format facilities that accommodate both production and distribution functions, reflecting a strategic shift toward integrated operations and reducing dependency on overseas suppliers.