Executive Summary
The week ending July 27, 2025, reveals a market in transition as container inventory normalizes to 26,060 units—a 24.4% decline from last week’s surge—while operational metrics show concerning deterioration, particularly in single move turn times, which spiked to 60.46 minutes. This volatility occurs against the backdrop of New York City’s congestion pricing, which began on Sunday, adding $9 tolls for vehicles entering Manhattan below 60th Street, alongside Port Authority toll increases to $16.06 during peak hours.
For industrial real estate stakeholders, this week’s data suggests the market is struggling to find equilibrium between extreme highs and lows. The national industrial vacancy rate rose to 7.1% in Q2 2025, while demand remains concentrated in newly built logistics products, creating a bifurcated market that rewards modern facilities while older properties face increasing challenges.
Container Inventory Analysis: Return to Moderate Levels
The correction from 34,480 to 26,060 containers represents a return to more sustainable levels after last week’s extraordinary surge. This 8,420-unit reduction suggests:
- Surge Absorption: Last week’s emergency overflow successfully processed through the system
- Operational Stabilization: Inventory returning to the 25,000-27,000 unit range
- Market Normalization: Moving away from extreme volatility toward steadier patterns
- Congestion Pricing Impact: Early effects of new tolling potentially smoothing truck arrival patterns
Turn Time Performance: Troubling Divergence
The week’s operational metrics reveal a concerning split:
- Single Moves: Deteriorated sharply to 60.46 minutes (from 43.45), a 39.1% degradation
- Double Moves: Improved to 62.08 minutes (from 74.70), a 16.9% enhancement
This divergence suggests operational challenges specific to single-move operations, possibly related to:
- Yard reorganization after last week’s surge
- Equipment positioning issues
- Labor allocation priorities favoring complex moves
- Impact of congestion pricing on truck arrival patterns
Dwell Time Performance: Continued Pressure
Critical Metrics: Terminal dwell remains elevated while rail shows improvement
- Terminal Departure Dwell: 4.21 days (increased from 4.09)
- Import Rail Departure Dwell: 2.29 days (improved from 2.46)
The sustained elevation in terminal dwell time above 4 days indicates ongoing yard congestion, while rail improvements suggest modal shift benefits. The e-commerce share of total retail sales hit a record-high 23.2% in Q3 2024 and is expected to reach 25.0% by year-end 2025, continuing to drive demand for efficient distribution networks.
Truck Visit Patterns: Stability Amid Change
The virtual stability in truck visits (82,844 vs 82,834) despite significant inventory reduction demonstrates:
- Operational Consistency: Maintained appointment schedules despite volume changes
- Efficiency Challenges: Same truck volume moving less cargo
- Congestion Pricing Adaptation: Early adjustments to new toll structures
- Driver Behavior Shifts: Potential timing changes to avoid peak toll periods
Year-Over-Year Performance Matrix
Industrial Real Estate Market Context
The full-year forecast for industrial absorption in 2025 is 156.4 million square feet, significantly below pandemic-era peaks. While absorption is still below historical norms, second-quarter leasing activity and the strength of newer products show that the industrial sector is adapting to shifting market forces.
Key market dynamics include:
- The share of build-to-suit (BTS) deliveries climbed to 30.4% year-to-date.
- Small warehouses under 100,000 sf remain especially tight with a 4.4% vacancy rate.
- Third-party logistics (3PL) providers’ share of bulk industrial leasing activity rose to 34.1%.
Impact of NYC Congestion Pricing
The implementation of congestion pricing adds new complexity to port operations:
- Most drivers entering Manhattan’s congestion zone will face a $9 toll.
- Combined with Port Authority tolls, the overall price to drive into New York City can range from $16.31 during off-peak hours to $25.06 during peak hours.
- Early reports suggest, “The first couple of days have been great, but that could be just people on vacation.”
Market Momentum Analysis
The four-week volatility pattern continues:
- June 29: 26,889 containers
- July 6: 18,515 containers (-31.1%)
- July 13: 34,480 containers (+86.2%)
- July 27: 26,060 containers (-24.4%)
This extreme volatility, with a 16,000-unit swing in just three weeks, represents unprecedented operational challenges requiring maximum flexibility from all stakeholders.
Strategic Recommendations
0-6 Months: Volatility Management Phase
For Property Owners:
- Capitalize on sustained interest in higher-quality buildings by marketing modern facilities.
- Develop flexible pricing models accommodating 25-35% weekly volume swings.
- Consider impact of congestion pricing on tenant transportation costs.
- Market properties with 31% premium for spaces under 100,000 sf.
For Tenants:
- Lock in space before e-commerce reaching 25% of retail sales by year-end 2025.
- Factor congestion pricing into total logistics costs when selecting locations.
- Negotiate flexible terms given continued market volatility
- Consider utilizing 3PLs for more inventory flexibility.
For Investors:
- Focus on properties serving markets like the Inland Empire and Dallas-Fort Worth. Worth, Atlanta, Chicago, and the New Jersey/Pennsylvania region.
- Target modern facilities as older spaces are becoming less attractive without significant upgrades.
- Consider impact of congestion pricing on property values near toll boundaries
- Prepare for net absorption projected at only 52.2 million square feet in the first half of 2025.
6-12 Months: Market Stabilization Period
For Property Owners:
- Position for acceleration in the second half to end the full year at 156.4 million square feet.
- Invest in technology as occupiers expect warehouses to align with modern operational priorities.
- Develop strategies for properties affected by sustained congestion pricing.
- Create solutions for supply chain resiliency in core industrial markets.
For Tenants:
- Plan for normalized operations as extreme volatility subsides
- Optimize networks considering permanent congestion pricing impacts
- Leverage flight to quality driving demand for modern logistics space.
- Evaluate onshoring and nearshoring strategies.
For Investors:
- Acquire properties positioned for 224.9 million square feet of positive absorption in 2026.
- Focus on emerging industrial markets that service manufacturing.
- Consider long-term impacts of congestion pricing on property values
- Target facilities near border regions or along key highways like Interstates 29 and 35.
12-18 Months: Structural Adaptation
For Property Owners:
- Prepare for sustained impact of congestion pricing on logistics patterns
- Develop properties supporting 26% e-commerce penetration, creating a need for 330 million sq. ft. of distribution space.
- Focus on sophisticated warehouses equipped with fulfillment technology.
- Create campus environments minimizing congestion pricing exposure.
For Tenants:
- Establish permanent strategies accounting for congestion pricing costs
- Invest in automated inventory systems and layouts optimized for last-mile delivery.
- Develop multi-site strategies to optimize toll exposure
- Lock in long-term agreements as market stabilizes
For Investors:
- Focus on development outside congestion zones but with easy access
- Acquire portfolios from owners struggling with new cost structures
- Invest in properties serving the broader category of industrial real estate including manufacturing and R&D space.
- Position for institutional demand as volatility moderates
18-60 Months: New Normal Evolution
For Property Owners:
- Build facilities optimized for post-congestion pricing logistics patterns.
- Develop 1.5 billion sq. ft. of warehouse/distribution space globally.
- Create integrated solutions minimizing total transportation costs.
- Focus on industrial properties with low vacancy rates and rising rents.
For Tenants:
- Establish networks fully adapted to congestion pricing reality.
- Invest in technology-enabled facilities in urban-adjacent areas.
- Develop permanent strategies for extreme volatility management.
- Plan for South Korea’s 43% e-commerce penetration as potential U.S. trajectory.
For Investors:
- Develop next-generation facilities designed around toll optimization.
- Focus on industrial sector stability compared to office volatility.
- Create value through operational excellence and location optimization.
- Position for a significant amount of new construction needed to keep pace with demand.
Disclaimer: The analysis, opinions, and recommendations contained in this report are based on information believed to be reliable but are not guaranteed. This report is intended for informational purposes only and should not be construed as professional real estate, investment, legal, or financial advice. Market conditions can change rapidly, and all real estate and investment decisions should be reviewed with qualified professionals including real estate advisors, attorneys, accountants, and financial consultants appropriate to your specific situation. We disclaim any liability for decisions made in reliance on this information.
Data Source: Port Authority of NY & NJ
