Washington, D.C., Industrial Market Report

Tenants gradually absorbing supply overhang. Upward vacancy movement in Washington, D.C., appears to have crested after a multiyear stretch of speculative deliveries and downsizing among some industrial tenants. Since reaching a 10-year high of 8.1 percent in early 2025, vacancy has fallen 50 basis points, with demand exceeding new supply in three of the past five quarters. Industrial users are reducing the metro’s supply overhang, which is contributing to the shift in vacancy. Specifically, more than 3.3 million square feet of post-2019-built space was absorbed on net over the past year ended in June. The market’s shrinking active construction pipeline suggests more speculative space will be occupied if tenant demand for new facilities holds up.