The Puget Sound industrial market wrapped up 2025 in a way that felt a little messy but not exactly grim. Net absorption finally flipped back into positive territory in the fourth quarter, even as vacancy edged higher and a flood of big-box warehouses hit the scene. Tenants are clearly gravitating toward newer, Class A distribution buildings, while older B- and C-class properties are seeing deals take longer to land. Asking rents eased a bit as the region worked through an unusually hefty slate of new deliveries.
According to a report by CBRE, net absorption in the Puget Sound region reached 386,969 square feet quarter-over-quarter while the overall vacancy rate climbed to 10.4%, which marked a 40-basis-point increase for the quarter and 1.8% year-over-year. CBRE noted that four major deliveries, including Bridge Point Tacoma Buildings A and B, Bridge Point Seattle I-5 and a project at 14021 Pioneer Way, brought about 1,811,570 square feet of new inventory to the market as 2025 ended. Those findings were highlighted this week by ConnectCRE.
Flight To Quality Widens The Divide
Leasing patterns underscore a clear flight to quality, with occupiers chasing modern, high-clearance buildings that can handle automation and robust yard operations. That preference is putting the squeeze on older stock as tenants consolidate footprints or stall on longer-term commitments. The segmentation is front and center in the Q4 review from Kidder Mathews, which notes that submarkets offering contemporary logistics product and strong highway access captured most of the leasing action.
In short, if a building is new, tall and near a freeway, it is getting attention. If it is older and less efficient, it is more likely to sit.
Ports And Trade Volumes Remain A Drag
One big headwind is still coming from the water. Freight flows through the regional gateway have softened, and the Northwest Seaport Alliance reported October 2025 container throughput of 233,927 TEUs, down 14.4% year-over-year. Weaker port volumes are dialing back urgency for import-heavy occupiers and making it tougher to quickly absorb all those new big-box deliveries.
Until trade flows stabilize, some distribution users are likely to keep punting on expansion plans or pivoting to smaller, more targeted footprints instead of locking in large blocks of space.
Investors Staying Selective
On the capital side, activity has not vanished, but buyers are choosing their spots carefully. Kidder Mathews tracked roughly $590 million in Q4 transactions and reported that 2025 closed with more than $2 billion in sales across the region. Institutional capital is zeroing in on modern, well-leased assets, while older buildings change hands less often or only with more generous pricing concessions.
That split is keeping money flowing into new product and last-mile locations, while much of the secondary inventory waits on the sidelines for a reset or a rethink.
What To Watch In 2026
CBRE notes that new supply has outpaced absorption every quarter since Q4 2022. That imbalance is likely to keep vacancy elevated until leasing catches up or developers hit the brakes on groundbreakings. Average direct asking rents ended Q4 at about $1.15 per square foot per month, blended NNN, which suggests landlords of modern product are largely holding the line while owners of older buildings feel more pressure to bend.
Early 2026 lease commencements, the timing and volume of new project deliveries and any recovery at the ports will be the key signals for whether the region’s industrial fundamentals can move from basic stabilization to something that looks more like a sustained improvement.
Bottom line: the Puget Sound market is not back to its ultra-tight peak, but a clearer pecking order is taking shape, with modern, well-located Class A properties poised to benefit if demand holds. Owners of aging stock, on the other hand, may need to sharpen pencils, reprice or reposition to stay in the game. Local developers, occupiers and investors will be watching the early 2026 leasing and trade data closely to see if the fourth-quarter uptick turns into a real trend. For now, the industrial sector looks like it is undergoing a cautious recalibration rather than staging a dramatic rebound.
