Industrial vacancy rates dipped in the first quarter of 2025, and while demand for industrial space remains high, the market will have to navigate some challenges with the ongoing threat of tariffs, brokerage firms said in their first-quarter reports.

CBRE and JLL recently released their industrial market reports for the first quarter of 2025, analyzing the state of the industrial market in Central Iowa.

Here are the highlights from each firm’s report.

JLL

• There was a 6.6% vacancy rate.
• Net absorption in YTD was 259,633 square feet.
• There was 55,000 square feet of industrial space under construction. Of that, 100% was pre-leased.
• Average lease rate was $6.21 per square foot.
• Kemin Industries’ newly built 321,500-square-foot warehouse at 2200 Maury St., in Des Moines was the largest industrial space delivered in the first quarter.
• The most significant transaction was the sale of a 131,000-square-foot warehouse at 1675 N.E. 51st St., which was acquired by American Fence for $4.9 million.

According to the report, more than 2.6 million square feet of speculative industrial space remains unoccupied.

The report also said that the region remains a hotspot for data center land acquisitions. It cited plans by Cielo Digital for a 500-megawatt data center, a seven-building development planned near the intersection of U.S. Highway 69 and Highway 5. It also cited plans by Edged and Cologix to build data centers in the region.

In its report, JLL said that warehouse development came to a virtual standstill and that developers are cautious as speculative projects have been slow to attract tenants.

“Compounding these challenges is the fluctuating cost of construction materials, driven by potential tariff implementations,” the report said.

One-third of construction supplies are imported, with half of those coming from Canada, Mexico and China, the report said.

“The Des Moines industrial market will navigate a challenging terrain for the rest of 2025,” the report said. “Strong demand for industrial space persists, yet the threat of potential tariffs casts a shadow of uncertainty.”

CBRE

• There was a 6.3% vacancy rate.
• Net absorption was 56,137 square feet.
• No new construction was delivered during the first quarter.
• 397,000 square feet of industrial space was under construction.
• Overall market asking lease rate was $7 per square foot.

In its report, CBRE said the highest asking rent was in the western suburbs at $7.54, driven by new warehouse development and flex space.

Positive net absorption was primarily concentrated in the northeast submarket, while the western suburbs had the lowest net absorption rate in the first quarter.

CBRE’s report said industrial construction was comprised of two projects totaling 397,000 square feet.

The largest was Kemin Industries’ new warehouse. The other is Insane Impact’s new 55,000-square-foot headquarters at 7901 S.W. 222nd St.

“Speculative development continued to remain on pause to start the year,” the report said. “Record amounts of speculative products have been delivered to the market over the last three years causing the market’s overall vacancy to rise,” CBRE said in its report. “Much of this space remains vacant and is located in the western suburbs and the northeast submarket.”

CBRE also said uncertainty over tariffs is affecting activity.

“The reality of material trade conflicts this year is now paired with softer economic data,” the report said. “Some of this could be due to firms taking a wait-and-see approach as they digest changing trade policy.”

Editor’s note: This story was updated at noon on April 24 to update the vacancy status of the Rider Logistics building in Grimes.