National Market Snapshot – Year End 2025
Office
A record low in net deliveries and a sustained demand rebound in the second half of the year kick-started the office sector’s long awaited recovery in 2025. Even so, the geographic unevenness of the demand resurgence and stagnant hiring both suggest that risks remain as the new year gets underway.
Given the overall improvement in performance, the forecast anticipates a vacancy plateau through 2026, followed by a gradual decrease. Rent growth is expected to strengthen in 2026, led by premium and Class A buildings.
Lease sizes remain 15–20% below the pre-pandemic average, with a key factor being the limited availability of large blocks of premium space. Faced with this, more large occupiers are renewing in place, leaving smaller tenants to fill in fewer and fewer available spaces in the best buildings.
Net absorption turned sharply positive in each of the final two quarters of 2025, offsetting occupancy losses earlier in the year. This has brought the national vacancy rate down to 14.2% from its record peak of 14.2% at midyear. Leasing activity edged higher as well, but has yet to fully recover to the level customary before 2020.
Industrial
Vacancy in the U.S. industrial sector has increased for nearly three years, reaching 7.6% as Q12026. Softer market conditions have shifted negotiating leverage more in tenants’ favor, and average national rents are no longer rising. Annual rent growth still measures 1.4%.
While net absorption has recovered from a negative reading in Q22025, the first in 15 years, deliveries continued to outpace demand gains through the second half of 2025.
Import activity to the largest U.S. seaports has remained volatile, and a prolonged curtailing of international trade could impair demand. Consumer spending could weaken due to the expected inflationary shock of tariffs and a reduction in real household incomes.
While net absorption has rebounded, availability remains elevated, measuring 9.7%, and sublease availability has climbed to 1.1%. Meanwhile, the speed at which available spaces are being leased has slowed. Leased space in 2025 had been typically listed as available for over 5 months, with that median time on market nearly doubling from a brisk 3.5 months only a few years ago.
Retail
The U.S. retail market entered the final stretch of 2025 in a period of recalibration, but with clear signs of stabilization and renewed momentum. After a challenging first half marked by high-profile bankruptcies and store closures, Q2025 saw the sector pivot as demand turned positive and the pace of move-ins accelerated to over 91 million square feet, the highest level since 2022. At the same time, move-outs slowed by 3.5% quarter-over-quarter as the wave of closures abated, and bankruptcies declined.
While space availability remains at its highest level in nearly three years, it has leveled off and is still approximately 12% below the prior 10-year average, underscoring the sector’s long-term tightening and the resilience of underlying fundamentals.
Leasing activity rose for the third consecutive quarter, reaching its highest level in three years. The median time to lease fell to a new historic low of under seven months, with high quality spaces generally leasing in less than five months. Smaller-format, freestanding, and in-line spaces continue to dominate leasing activity, but there has also been an uptick in interest in larger spaces.
Looking ahead, the sector faces continued downside risks as the remaining closures from recent bankruptcies work through the system and macroeconomic headwinds persist. However, the combination of low space availability, steady demand from a diverse array of sectors, and minimal new supply should limit the magnitude of any vacancy expansion.
Local Trends
Office: Vacancy remains high at 15–20%, with large single-user buildings hardest to backfill. Some markets are seeing positive absorption, including Milwaukee (+54,000 SF in Q2), where vacancy dipped to 18%. Quality assets in suburban and downtown areas benefit from the flight-to-quality trend. Government and healthcare office needs are supporting absorption in the Fox Valley. Landlord financial strength and TI packages drive decisions, with well-capitalized owners capturing demand while Class B and C space lags.
Industrial: Momentum picked up in Q2 after a soft Q4/Q1, with SE Wisconsin posting ~1.1M SF of positive absorption. Vacancies rose to 6.2% as deliveries outpaced move-ins. Milwaukee metro vacancy is ~5.5%, while Northeast and Central Wisconsin remain lower at 2–3%. Demand is strong for last-mile and smaller manufacturing sites in Central/Northeast Wisconsin, while larger distribution users stay active along I-41 and I-43. I-94 big boxes lead activity, driven by 3PLs and manufacturing. Rents are steady to slightly higher north of Milwaukee. Developers are limiting new starts, favoring build-to-suits and user expansions over spec.
Retail: Local fundamentals softened in Q2, with Southeast Wisconsin posting negative absorption and vacancies rising to 5.8%, reflecting national trends from bankruptcies and rightsizing in older space. Limited construction keeps quality space in demand, with grocery anchored centers performing best statewide. Experiential, local food, and restaurant concepts remain active north of Milwaukee, along with quick-serve and drive-thru users. Redevelopment of legacy retail and mall sites is under discussion as capital returns. Discount, clothing, and other big-box retailers are most at risk from tariffs and supply chain issues.
Multi-Family: Milwaukee’s mid-year read is stable – low vacancy, balanced supply, and steady demand – against a national backdrop of modest rent growth and strong absorption. North of Milwaukee, demand is concentrated in walkable infill sites and near employment nodes (hospitals, schools, manufacturing clusters, etc.). New supply is modest versus major metros, supporting steady occupancies and moderate rent growth.
