Quarterly Market Trends
Des Moines Industrial Market Report Q3 2025: Key Trends, Opportunities & Insights
Market Cycle Context: From Growth to Stabilization
Over the past decade, the Des Moines industrial market has experienced significant transformation:
- 2014–2021: Industrial property values nearly doubled, fueled by e-commerce expansion, supply chain shifts, and reshoring.
- 2021–2024: Over 6.8 million square feet of new space delivered (an 8.3% inventory increase), leading to a market correction as supply outpaced demand.
- 2025: The market has reached a new equilibrium, with prices and rents stabilizing and the construction pipeline slowing dramatically.
Economic Overview: Labor Market & Manufacturing
Region | Unemployment Rate (Aug 2025) | Change YoY | Manufacturing Job Growth |
Des Moines MSA | 4.2% | +0.7% | -900 jobs |
Iowa (Statewide) | 3.8% | N/A | N/A |
United States | 4.3% | +0.1% | N/A |
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- Des Moines MSA: Unemployment rose to 4.2%, tracking closely with national trends and slightly above the state average.
- Manufacturing: Industrial job growth in manufacturing declined by 900 jobs year-over-year, reflecting ongoing sector adjustments.
Market Overview: Inventory, Absorption & Vacancy
Metric | Q3 2025 Value | YTD 2025 | Historical Context |
Total Market Size | 82.1 million sf | — | +8.3% since 2021 |
Net Absorption | -154,100 sf | +375,000 sf | Highest since early 2023 |
Vacancy Rate (Overall) | 5.7% | — | Stable, near cyclical peak |
Multi-Tenant Absorption | -41,200 sf | +535,700 sf | |
Multi-Tenant Vacancy Rate | 12.8% | — | |
Construction Pipeline | 106,800 sf (7 projects) | — | Down 98% from 2021-2024 peak |
New Deliveries (YTD) | 376,500 sf | — |
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- Absorption: Despite a quarterly dip, year-to-date absorption remains positive, signaling ongoing tenant demand.
- Vacancy: The overall 5.7% vacancy rate is healthy and stable, while multi-tenant properties offer more options at 12.8%.
- Construction: Only 106,800 sf under construction—a dramatic reduction from previous years—supports future market balance.
Submarket Performance: Leaders & Laggards
Submarket | Vacancy Rate | Absorption (Q3) | Notable Activity |
Ankeny | 1.4% | N/A | Lowest vacancy, strong demand |
Des Moines CBD | 5.7% | +15,700 sf | Only market with positive absorption |
Des Moines West | 8.2% | N/A | Highest vacancy, weakest performance |
Des Moines South | N/A | -104,500 sf | Largest negative absorption (Westco exit) |
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- Ankeny: Tightest submarket, extremely limited availability.
- Des Moines CBD: Only submarket with positive absorption in Q3, showing resilience.
- Des Moines West: Highest vacancy, indicating more options for tenants.
- Des Moines South: Largest negative absorption, mainly due to a major sublease vacancy.
Leasing & Sales Activity: Market Engagement
- Leasing: 372,400 sf leased in 23 transactions during Q3 2025, demonstrating strong tenant activity.
- Sales: 28 properties totaling 858,500 sf sold for $95.8 million, reflecting robust investor confidence and market liquidity.
Construction Cycle: Supply & Demand Rebalancing
- Historic Construction (2021–2024): 6.8M sf delivered, expanding inventory by 8.3%.
- Current Pipeline: Only 106,800 sf under construction—a 98% reduction from the recent peak, signaling a return to supply-demand balance and supporting future rent growth.
Market Outlook & Strategic Recommendations
- Stabilization Phase: The market is at the bottom-to-recovery transition, with vacancy rates stabilizing and absorption improving.
- Investment Climate: Reduced development risk, stabilized pricing, and strong transaction activity make this an attractive entry point for investors.
- Tenant Opportunities: Multi-tenant properties offer availability, while high-demand submarkets like Ankeny present limited supply and competitive leasing.
- Submarket Strategy: Focus on Tier 1 submarkets (vacancy <3%) for stability, and monitor Tier 3/4 for value opportunities as the market recovers.
