The 2025 Colliers Logistics & Transportation (L&T) Supply Chain Conference gathered industry leaders for a timely discussion on how market changes and macroeconomic factors are reshaping industrial real estate. The clear consensus was that today’s market requires a sharp return to fundamentals, supported by strategic long-term thinking.

Meeting Occupiers’ Needs in a Time of Uncertainty

Uncertainty remains a dominant force in occupier decision-making. From slowing activity at the Port of Los Angeles, where one port operator reports operating at just 50% of its typical volume, to global trade instability, users are proceeding with caution. Many are still adjusting from pandemic-era overexpansion, and it may take 12 to 18 months to fully correct space overages.

With excess space and economic unpredictability, many companies are hesitant to make long-term commitments. Subleasing, consolidation, and rethinking operational footprints have become common strategies. Occupiers are also leaning more heavily on their brokers and advisors, in addition to seeking direction directly from executive leadership. Location strategy is being driven by efficiency and proximity to operations. Occupiers want real estate decisions to support business performance, reduce friction, and improve decision-making across the supply chain.

The Lease vs. Own Debate Intensifies

A growing number of occupiers are revisiting the lease-versus-own decision, especially those making large investments in automation. Ownership allows for facility customization, cost predictability, and long-term control, which are key drivers in today’s environment.

Occupiers, not just large-scale users but also mid-size ones, are increasingly asking for purchase pricing in RFPs. At the same time, many are seeking to work with fewer landlords, placing a premium on long-term relationships and proven performance. Negative past experiences are being carefully considered in site selection decisions.

Data Centers: Power Over Place

The data center sector continues its rapid expansion. Of the 9,400 data centers globally, 38% are in the United States. Growth is no longer limited to traditional hubs like Northern Virginia. Site selection today is all about power availability and speed to implementation. Geography and square footage are secondary.

Developers are even locating near other infrastructure, such as airports and utility corridors, to tap into shared systems, which was previously avoided. Yet the path to development remains complex and capital-intensive. With average build-outs costing 10 million dollars per megawatt, and most centers requiring 25 to 50 megawatts, the upfront investment is significant.

Utility politics also play a role. Even where natural gas is accessible, some utilities will not remit it if they cannot monetize it. While conversions of existing buildings are technically possible, they are often costly and inefficient. Demand continues to rise, but limitations on power and local infrastructure remain key challenges.

The Human Factor Driving Resilience

The event’s keynote speaker, David Burkus, shared research that added a human dimension to the conference, highlighting how high-performing teams are defined by clarity, empathy, and trust. Teams with a strong understanding of their roles and end goals are 2.3 times more likely to be engaged. In uncertain markets, leadership clarity and aligned objectives make teams more adaptable and resilient. As companies consolidate operations and rethink real estate strategies, it is often the strength of their teams that determines how well they can pivot.

Market Signals Point to Rebalancing

Despite headlines pointing to market volatility, speakers including Colliers’ Craig Hurvitz and Steig Seward shared signals of stability. Industrial construction is slowing while demand is normalizing, tightening the gap between supply and demand. Vacancy may peak in the short term, but it is expected to stabilize as equilibrium returns.

However, the third-party logistics sector, especially Asian-based 3PLs, which drove much of 2024’s demand is slowing. Tariffs and trade tensions have softened international activity in early 2025, although long-term fundamentals remain intact.

As for reshoring, while many companies are assessing its feasibility, the transition is slow. One panelist noted that it took furniture manufacturers nearly a decade to shift operations out of China to Southeast Asia. A rapid move back to the United States is unlikely, especially given cost concerns and supply chain complexities.

Seward highlighted four key economic indicators to watch for signs of recession: 10-year Treasury yields, GDP growth, consumer spending, and job growth. Rising home values and equity markets are helping buoy consumer confidence for now.

The industrial market is moving towards equilibrium as supply and demand begin to balance. Decision-makers are leaning into long-term partnerships and sound strategy instead of short-term gains. As we move deeper into 2025, success will be defined not by who moves the fastest, but by who moves the smartest. Those grounded in fundamentals, guided by data, and supported by resilient teams will be best positioned for what comes next.