If the office market in August was about bold returns, industrial markets were about measured moves.  Global occupiers have not paused, nor have they rushed forward.  Instead, they are recalibrating – balancing the need for resilience against the reality of higher costs, trade tensions and shifting demand patterns.

The market signals from August tell a consistent story.  In India, new U.S. tariffs on manufactured exports triggered immediate recalculations by corporates already managing complex supply chains. [1] In Southeast Asia, Vietnam and Indonesia saw renewed interest from multinationals diversifying away from China.  In Australia, the removal of hundreds of nuisance tariffs offered modest relief to exporters.  In the US and Europe, occupiers leaned toward consolidation and efficiency rather than expansion. 

These measured moves are shaping the cycle ahead.  They reveal an occupier mindset attuned to volatility, willing to adapt networks and portfolios, and determined to ensure that industrial real estate continues to serve as the backbone of corporate resilience.   In the spirit of the recently completed first phase of the (Y)OUR SPACE tour, lets go around the global markets to assess signals and sentiment.

APAC: Expansion Under Pressure

India’s Tariff Shock

The most immediate industrial story in Asia came from India.  On the 27th August, the United States doubled tariffs on Indian imports to as much as 50 per cent, covering a wide basket of goods including textiles, gems and jewellery, chemicals, and automotive parts. [2]  For exporters – pharmaceuticals, textiles, automotive components – this represented a sudden escalation of cost.

The occupier response was swift.  Exporters began to reroute goods to tariff-free destinations, slow production intended for the U.S. and reassess inventory strategies.  At the same time, India’s rupee fell to a record low of ₹88.36 per US dollar as investors reacted to tariff escalation, prompting intervention by the Reserve Bank. [3] 

In leasing markets, the impact was hesitation: why commit to new industrial space when demand patterns are uncertain?  Yet India’s domestic consumption story remains strong.  Warehousing demand around Delhi, Mumbai, and Bengaluru is still expanding, fuelled by e-commerce and FMCG growth.  Indeed, August saw record-high leasing activity in India’s industrial and logistics markets, driven by manufacturing occupiers leveraging incentives and asset-light strategies. [11]

Meanwhile, policymakers moved to cushion the blow.  The Indian government announced support packages for exporters and hinted at possible SEZ relaxations. [4][5]  Finance Minister Nirmala Sitharaman stressed that relief measures would ‘mitigate sudden shocks’ to exporters.  In parallel, the government approved a large GST cut on consumer items to stimulate domestic demand and counter tariff-driven inflationary pressure.  [6][7]

The result is a patchwork of signals, but all point to the same reality – industrial footprints are being reshaped by geopolitical exposure.  Occupiers are hedging, investors and recalculating, and government measures are attempting to smooth turbulence. 

Vietnam and Indonesia Gain

While India absorbed tariff pressure, Southeast Asia benefitted.  Vietnam and Indonesia both recorded double-digit increases in leasing demand as occupiers diversified away from China and hedged tariff risk. 

In Vietnam, electronics and footwear manufacturers expanded plant-adjacent warehouses.  In Indonesia. Automotive and consumer goods companies committed to multi-tenant logistics parks near Jakarta.  The signal here is clear: occupiers are spreading their bets.  Even if production volumes remain anchored in China or India, firms want operational footholds in Southeast Asia to create optionality.  For CRE leaders, this means industrial strategies can no longer be single-market; they must be regional portfolios balancing exposure, resilience, and growth.

ANZ: Selectivity Amid Tariff Shits

The industrial story from Australia and New Zealand in August was less about expansion than about positioning.

In Canberra, the federal government announced the removal of more than 500 nuisance tariffs, effective immediately.  While not headline-grabbing, the reform reduces compliance costs for importers and exporters and signals a policy shift towards smoothing supply chains at a time of global tariff turbulence.  For occupiers, it offers a small but welcome reprieve in network planning.

In Sydney and Melbourne, vacancy in prime logistics hubs remains tight, but tenants are consolidating into better-located, higher-spec facilities rather than pushing for expansion.  Local reporting highlighted that occupiers are wary of over-committing in a climate of global trade uncertainty, preferring functional efficiency over scale.

In New Zealand, Fonterra confirmed further investment in its South Auckland distribution hubs to relieve export bottlenecks.  The move reflects the enduring importance of food logistics to support the country’s economy, and the occupier need to build resilience into export flows.

The signal from ANZ is one of cautious optimisation: occupiers are tidying portfolios, seeking efficiency, and welcoming policy reforms, but not driving the large-scale expansions seen elsewhere in APAC.

APAC Discipline

Another striking dynamic is how APAC occupiers are embedding discipline into their strategies.  Unlike in North America, where sublease volumes are surging, Asian tenants are not over-committing and then shedding space.  Leases are measured, aligned to production volumes, and long-term.

This reflects cultural and policy differences:  governments in Singapore, Korea, and Japan continue to incentivise domestic production stability, which sustains occupier confidence.

The message from APAC is therefore one of adaptation without panic.  Occupiers are adjusting supply chains, expanding selectively, and using the region’s diversity to buffer against tariff shocks.

United States: Vacancies, Subleases, and Measured Onshoring

Vacancy at a Decade High

At just over 7% in Q2 2024, U.S. warehouse vacancy reached its highest level in more than a decade.  The figure is a legacy of the construction surge of 2022-24, when developers added over a billion sq ft of logistics space on the assumption that pandemic-era e-commerce growth would continue unchecked.  As demand has moderated, much of that speculative stock is now available.  This softening is not just about excess supply.  Net absorption in Q2 turned negative by 11.3 million sq ft – the first contraction in the sector since 2010.  [12]  The downturn reflects occupier caution, high borrowing costs, and policy uncertainty.

Subleasing and 3PLS as Pressure Valves

Occupiers are not rushing to absorb the excess.  Instead, they are subleasing underused facilities – with sublease availability climbing to 225m sq ft – and turning to third-party logistics providers (3PLs) for swing capacity.  These strategies give businesses flexibility without locking them into long-term obligations, reflecting a more cautious, measured posture.

De-Minimis Ends: FTZs in the Spotlight

The most immediate August shift was the end of the $800 de-minimis duty-free threshold.  For years, this exemption allowed e-commerce brands to flood the U.S. with low-value packages tariff-free.  Its removal forces a wholesale rethink of fulfilment models.  Retail platforms such as Etsy and eBay reported immediate cost impacts as import-driven sellers faced new duties. [8]  Analysts noted that occupiers rushed to Foreign Trade Zone (FTZ) capacity ahead of the 29 August deadline, particularly near ports. [13]  Bulk-shipping into FTZs before domestic release allows firms to delay duty payments and smooth cashflow – a tactical strategy has become central to network planning.

Port Markets Underperform

Despite import growth of 3.5% y-on-y in H1 2024, major U.S. port markets – Los Angeles, the Inland Empire, Oakland, and New Jersey – recorded negative absorption and declining rents in August. [14]  Occupiers are shifting bulk further inland to lower-cost, better-connected hubs rather than pay premium rents near ports.

Onshoring Manufacturing Capacity

Tariffs on Chinese and Indian imports are also influencing manufacturers.  Firms in electronics, automotive and machinery are exploring incremental expansions in the Midwest and Southeast, aiming to bring assembly and component activity closer to end-markets and transport corridors.  These are not sweeping relocations, but they represent the early signs of a slow pivot toward domestic resilience.

Older Stock Holds Firm

Amid the caution, demand for older, affordable stock in secondary markets remains strong.  Brookfield’s acquisition of a 53-warehouse portfolio in southern U.S. cities highlighted that assets with modest specifications but attractive rents are almost 95% occupied.  Occupiers under cost pressure are choosing functional efficiency over speculative premium builds.

Measured Moves in a Resilient Market

Taken together, these developments show a market defined less by retreat than by measured recalibration.  Occupiers are consolidating logistics networks, making tactical use of sublease and FTZ strategies, and probing opportunities to onshore production.  Vacancy is rising because occupiers are moving carefully – not because they have disappeared.

EMEA: Export Exposure and the Sustainability Puzzle

Germany’s Export Weakness

In Europe, the industrial occupier story was dominated by Germany.  Manufacturing orders declined again in June, with analysts linking the slowdown directly to U.S. tariff exposure.  Export-orientated occupiers – in automotive and engineering – are responding by slowing production and postponing expansion of logistics space.

This has knock-on effects across Europe’s industrial heartlands, where leasing markets are seeing a pause rather than a contraction.  The risk is that a prolonged tariff stand-off could reshape Europe’s role in global supply chains.  Occupiers are already modelling scenarios where production is shifted closer to U.S. consumers or diversified towards APAC growth markets.

EU-US Tariff Negotiations

At the same time, there were reports in August of potential EU-US negotiations to remove tariffs on some industrial goods in exchange for concessions on automobiles.  If realised, this could unfreeze demand and restore confidence in export-linked logistics leasing.  For occupiers, the uncertainty is paralysing: decisions are being delayed until policy becomes clearer.

Sustainability Pressures

Another European dynamic is sustainability.  Just as in the office market, occupiers of industrial space are under growing pressure to decarbonise.  Warehouses in the UK. France, and the Netherlands are being retrofitted with solar, heat pumps and insulation upgrades to meet regulatory targets.  Occupiers prefer these assets not just for compliance but for cost reduction, as energy volatility remains a significant risk.

The European story is therefore one of hesitation and hedging.  Export-exposed occupiers are slowing down, while domestic e-commerce and grocery supply chains continue to generate steady demand.

Cross-Cutting Signals: What Occupiers are Doing

The stories, sentiment and signals from August reveal several cross-cutting patterns:

1. Delay and Diversify
   Export-exposed firms in India and Germany are delaying new commitments, while diversifying production and storage into Vietnam, Indonesia, and U.S. FTZs.
   
   
2. 3PLS as Shock Absorbers
   Across geographies, 3PLs are absorbing demand from occupiers unwilling to commit long-term.  They have become the default option for flexibility.
   
   
3.  Older Stock’s Revival
   Occupiers under margin pressure prefer affordable, functional warehouses over new builds.  Cost has trumped prestige.
   
   
4. Tariffs as Occupier Risk
   More than any other factor, tariffs are shaping occupier behaviour.  They determine whether space is taken, held or subleased.
   
   
5. Sustainability as a Constant
   Even in industrial, ESG pressure is real.  Retrofits and renewable-ready stock are gaining favour, especially in Europe and Australia.

Conclusion: The Defining Industrial Moment?

If the office sector’s defining cycle is about culture and hybrid work, the industrial sector’s is about tariffs and resilience.  August 2025 showed occupiers making clear choices in response.

In APAC, firms are expanding cautiously, using India for scale but hedging into Vietnam and Indonesia.  In the U.S. occupiers are retrenching into FTZs, subleasing surplus, and favouring cheaper warehouse space. In Europe, exporters are pausing until tariff clarity arrives, while sustainability pressures accelerate retrofits.

These are not tentative moves; they are decisive responses to a harsher operating environment.  Occupiers are no longer chasing growth at all costs.  They are optimising, hedging, and embedding resilience.

The next cycle will be remembered as the moment when occupiers redefined industrial real estate around discipline and durability.  The warehouses that matter will not be the newest or the biggest, but the ones that best align with a strategy of resilience in an uncertain world.

References

[1] Reuters. Trump’s doubling of tariffs on Indian imports takes effect, hiking tensions. 27 Aug 2025.
[2] India Times. India to face 50% US tariff as Trump punishes Russian oil trade. Aug 2025.
[3] Reuters. Rupee hits record low on tariff jitters, but central bank caps decline. 5 Sep 2025.
[4] Reuters. India will help its exporters hit by US tariffs, says Finance Minister. 5 Sep 2025.
[5] Economic Times. India’s government plans relief measures for exporters amidst 50% US tariffs. Sep 2025.
[6] Times of India. India charts strategy to soften 50% US tariff on exports; CEA says govt working overtime. Sep 2025.
[7] Barron’s. India’s tax cuts blunt Trump’s tariff blow. Sep 2025.
[8] MarketWatch. Trump is closing a shipping loophole. Shares in Etsy and eBay tumble. 29 Aug 2025.
[9] Reuters. What the end of the de-minimis exemption means for US shoppers and businesses. 29 Aug 2025.
[10] IEN. What the end of the de-minimis exemption means for US trade. Aug 2025.
[11] Economic Times. Manufacturing push drives record leasing in India’s industrial real estate. Aug 2025.
[12] [Occupier news report] US industrial absorption turns negative for first time since 2010. Aug 2025.
[13] [Occupier news report] FTZ warehouse demand spikes ahead of de-minimis expiry. Aug 2025.
[14] [Occupier news report] Port-proximate U.S. markets see negative absorption despite import growth. Aug 2025.