The U.S. warehousing market has experienced 9 months of soft demand followed by a 2025 Q4 capacity crunch, according to PopCapacity’s PopPulse report.
This annual report spans 2,256 facilities and nearly 474 million square feet of third-party warehousing.
The report reveals a tale of two halves: nine consecutive months of soft demand where available capacity never dropped below 22%, followed by a dramatic Q4 reversal that saw warehouse utilization surge from 78% in September to 91% in December 2025, the tightest market conditions recorded since PopPulse began tracking the sector.
The U.S. warehousing market has experienced 9 months of soft demand followed by a 2025 Q4 capacity crunch, according to PopCapacity’s PopPulse report.
This annual report spans 2,256 facilities and nearly 474 million square feet of third-party warehousing.
The report reveals a tale of two halves: nine consecutive months of soft demand where available capacity never dropped below 22%, followed by a dramatic Q4 reversal that saw warehouse utilization surge from 78% in September to 91% in December 2025, the tightest market conditions recorded since PopPulse began tracking the sector.
PopCapacity
“The 2025 warehousing market told a story of uncertainty followed by urgency. Shippers who waited out the soft market found themselves scrambling for space in Q4 as utilization spiked and rates tightened. This data underscores why real-time visibility into warehouse capacity is no longer optional — it’s a competitive necessity,” says Taylor Harris, COO of PopCapacity.
Key takeaways:
· The extended soft market through the first three quarters was driven in part by shifting federal tariff policies, which stalled warehousing projects and dampened demand throughout Q1–Q3.
· Storage rates experienced significant volatility, with monthly averages ranging from $15.56 per pallet in October to $21.63 per pallet in September.
· Average handling-in costs landed at $9.55 per pallet, while handling-out averaged $10.36 per pallet.
· Labor rates averaged $40.68 per hour across the network.
· Regionally, the Southeast maintained its dominance with 34% of total demand and 12.4% year-over-year growth, while the Southwest emerged as the fastest-growing region at +18.9% YoY. The Midwest was the only region to contract, posting -2.3% growth.
· Warehouses aggressively added Foreign Trade Zone (FTZ) and Bonded certifications throughout the year as shippers sought to navigate tariff uncertainty.
PopCapacity
· From January through September 2025, utilization ranged from a low of 64% in April to 78% in September, with available capacity never dropping below 22%. The demand index tracked well below utilization, sitting between 56% and 71%: signaling that shippers were searching but not committing at the pace operators hoped for.
PopCapacity
· The inflection point arrived in September 2025, when utilization crossed 78% and the demand index jumped to 71%. From there, the acceleration was rapid: October hit 81%, November 85%, and December reached a cycle high of 91%. Available capacity collapsed from the 28–36% range to just 9% by year-end.
PopCapacity
· April saw the highest handling rates: $12.12 per pallet inbound and $12.81 per pallet outbound, potentially reflecting spring front-loading activity as shippers attempted to beat anticipated tariff changes. October and November 2025 recorded the lowest handling rates of the year ($7.96/$7.46 in and $8.13/$8.36 out respectively). December closed the year with a rebound across all rate categories as peak season demand took hold.
What to watch in 2026
Q1: Capacity normalized, deal flow strengthening: Capacity returned quickly after peak season ended. Utilization in January ran approximately 10% below January 2025 levels, confirming that Q4’s crunch was seasonal rather than structural. On the demand side, new project volume in Q1 is tracking in line with Q1 2025, but the more telling signal is conversion: roughly 10% more projects have moved to close compared to the same period last year. Shippers are not just searching, they are committing, a meaningful shift from the hesitation that defined much of FY2025.
Tariff landscape: Limbo as opportunity: A recent Supreme Court ruling struck down prior tariff orders, introducing a degree of legal clarity after years of policy whiplash. However, new tariff actions and ongoing legal challenges mean the trade environment remains fluid. FTZ and Bonded warehouse certifications remain highly relevant in this context: the period of limbo created by shifting rulings could actually drive opportunistic demand, as some shippers move goods strategically to take advantage of the current window before the next policy change lands.
Nearshoring, reshoring, and the port realignment: Manufacturing decisions continue to shift supply chains back toward the United States, Latin America, South America, and parts of Europe, pushing more freight to originate on the eastern side of the Panama Canal. New warehousing demand in both Georgia and Texas is up compared to Q1 2025, while new needs in California have softened. That said, California’s pullback is expected to be temporary; as reshoring decisions mature and West Coast trade flows stabilize, demand there is anticipated to rebound. The broader story is one of geographic diversification across the network, with Gulf Coast and East Coast corridors emerging as structural growth markets.
PopCapacity
Southwest momentum and emerging corridors: The Southwest’s +18.9% demand growth in FY2025 established it as the fastest-expanding market in the network. That trajectory is likely to continue as nearshoring activity along the U.S.-Mexico border accelerates and cross-border logistics infrastructure matures. Meanwhile, Gulf and East Coast markets are emerging as complementary growth corridors, driven by the port realignment trends above. Demand expansion in 2026 is shaping up to be geographically broader than any prior cycle.
