The warehouse sector — more specifically, weakening demand from companies for warehouse space — is yet another sign the economy is kind of stuck in “meh” mode.

According to recent data from NAIOP, the Commercial Real Estate Developers Association, leasing demand for industrial space shrank by 11.3 million square feet in the second quarter of 2025. (Industrial space is basically synonymous with warehouses these days.)

That’s the first quarterly decline in 15 years. And yep, a lot of it has to do with that “T” word.

Amazon isn’t the only game in town when it comes to warehouses. Take the Georgia market, where Asian car brands like Hyundai and Kia with autoplants throughout the Southeast are also big warehouse players. They need space for all the fenders and batteries and other parts they import through the port of Savannah.

“A lot of it was being shipped in through the ports and then stored and/or transported to Atlanta and stored and assembled for the ultimate car to be distributed out,” said Gregory Boler Jr., an industrial real estate developer based in Atlanta.

He said recently, though, those Asian automakers seem to have less need for all that space.

“We have seen a slow down in that leasing really since April,” he said.

April 2, of course, was the Trump administration’s tariff announcement.

While many of those tariffs have since been lowered or scrapped, the anxiety they provoked are leaving some warehouse shelves empty 

“Dealmaking is going to always pause when there's uncertainty right? So if you don’t feel like, ‘Boy, if I don’t make a decision today … someone else is going to take that space away from me,’ you might just delay until you really need it,” said Joshua Harris, a real estate professor at Fordham University.

It’s not just trade policy that’s causing demand for warehouse space to slump. A big part of the warehouse downturn is happening in the Sun Belt — partly because new housing construction is slumping there, too.

“Construction materials are huge demand drivers for industrial warehouse. Furnishing, home goods, everything, even from cabinetry makers take up big spaces,” Harris said.

To be clear, the warehouse leasing data is more of a yellow caution light than a red alert at the moment. Activity is still much higher than in recessionary times.

But Beth Gutelius, a senior research fellow at the University of Illinois Chicago’s Center for Urban Economic Development, said more often than not, the way warehousing goes, so goes the rest of the economy.

“I think it is a bit of a leading indicator, especially if you look at employment with the real estate market, which are both softening right now,” she said.

Warehouse employment is down about 27,000 jobs year over year, according to the latest jobs report.