First Industrial Realty Trust (NYSE:FR) reported fourth-quarter and full-year 2025 results on its earnings call February 5, 2026, highlighting stronger funds from operations growth, sizable cash rental rate increases, and continued leasing progress across its portfolio and development pipeline. Management also introduced initial 2026 guidance and discussed market conditions, tenant demand, development lease-up timing, and capital allocation priorities.
2025 results and operating metrics
Chief Financial Officer Scott Musil said NAREIT funds from operations (FFO) for the fourth quarter were $0.77 per fully diluted share, up from $0.71 in the fourth quarter of 2024. For full-year 2025, FFO per fully diluted share was $2.96 versus $2.65 in 2024, a 12% increase.
During the quarter, approximately 1.8 million square feet of leases commenced, including roughly 600,000 square feet of new leases, 600,000 square feet of renewals, and 500,000 square feet tied to developments and acquisitions with lease-up.
Leasing: strong spreads, early progress on 2026 rollovers
Chief Executive Officer Peter Baccile said 2025 produced strong cash rental rate, cash same-store NOI, and FFO growth, while the team continued signing leases in development projects. For 2025, the company reported a 32% cash rental rate increase on new and renewal leasing. Excluding a “large fixed-rate renewal” in Central Pennsylvania previously discussed, management said the cash rental rate increase was 37% and the straight-line increase was 59%.
Management also pointed to higher annual escalators embedded in recent leasing. For 2025 commencements (excluding the fixed-rate renewal), annual escalators were 3.7%, and for the whole portfolio they are expected to be 3.4% in 2026.
On 2026 leasing, Baccile said the company was “off to an excellent start,” with 45% of 2026 rollovers addressed by square footage and an overall cash rental rate increase of 35% on new and renewal leasing. For full-year 2026, management expects cash rental rate growth of 30% to 40%.
When asked about retention, management said 2025 retention was 71% and it expects a similar outcome in 2026, noting that the remaining activity for 2026 expirations was still “TBD” but many discussions were described as close to completion. The company also said it has only two remaining rollovers above 200,000 square feet, and it is working on a renewal in Southern California of about 555,000 square feet.
Market backdrop and tenant demand
Baccile cited CBRE data showing a notable rebound in broader industrial leasing activity in the fourth quarter. According to CBRE, fourth-quarter leasing volume was a record 226 million square feet, up 22% year over year. Full-year leasing totaled 941 million square feet, the second-highest year on record behind 2021 and more than 12% above 2024 levels.
Management said third-party logistics providers (3PLs) remained the most active group, representing 36% of total leasing, with retail and manufacturing occupiers rounding out the top three categories. Vacancy in the fourth quarter was cited at 6.7%, with CBRE reporting 58 million square feet of net absorption and 78 million of completions for the quarter. For the year, net absorption was 149 million square feet and completions were 282 million.
On supply, construction starts nationally were cited at 45 million square feet in the fourth quarter, in line with the third quarter and “still well below” the 2022 peak. Pre-leasing on the under-construction pipeline was said to be about 40%.
Management described improving tenant engagement, citing more inquiries, tours, and requests for proposals, though it emphasized that timing remains difficult to predict because tenants are still deliberate in decision-making. In the Inland Empire, management pointed to improving fundamentals, including a “record low” level of deliveries and starts and slightly lower sublease availability.
On major tenant activity, management said Amazon is active in a number of markets for additional space and noted the company has been “particularly active” in the fourth quarter of 2025, estimating roughly 10 million square feet of leasing by Amazon industrywide during that period.
In response to questions on building quality and tenant requirements, management cited features such as clear height, trailer parking, column spacing, parking, building geometry, and circulation as key traits. It also said tenants are increasingly focused on power availability, and that the company generally installs 3,000–5,000 amps depending on building size.
Investments, development starts, and capital structure
During the quarter, the company acquired a 968,000-square-foot, fully leased building from its Camelback 303 Phoenix joint venture for $125 million. Management said the purchase price was net of $18 million, representing the company’s share of the venture’s gain on sale, promote, and fees. The joint venture also sold its last remaining 71 acres to a data center operator, and management said the venture concluded with an overall IRR of 90%.
First Industrial also acquired a newly constructed 117,000-square-foot facility in the Baltimore market, described as infill eastern suburbs of Washington, D.C., near Andrews Air Force Base, for $31 million. The building was two-thirds leased at acquisition. Management said the combined stabilized cash yield on the net purchase price of the Phoenix building plus the D.C. facility is 6.3%.
On development, the company said it will break ground on two new buildings in the first quarter:
- First Park Miami in Medley: a 220,000-square-foot project; management said it has developed 1.4 million square feet across eight buildings at the location and has additional land supporting another 859,000 square feet of projects.
- First Arlington Commerce Center 3 in Dallas: an 84,000-square-foot building, described as the third project in that park.
Total investment for the two starts is expected to be $70 million, with a combined projected cash yield of approximately 7%. In South Florida, management said it is seeing steady activity and noted the Miami start would not deliver until the first quarter of 2027.
On financing, Musil said the company renewed two unsecured term loans: a $425 million term loan maturing in January 2030 (with a one-year extension option), and a $300 million term loan that was increased by $75 million to $375 million, maturing in January 2029 (with two one-year extension options). Pricing for both refinancings removed an incremental 10 basis point SOFR adjustment. The company also amended a $200 million unsecured term loan to eliminate the same 10 basis point SOFR adjustment.
2026 guidance, lease-up assumptions, and dividend increase
For 2026, management issued initial NAREIT FFO guidance with a midpoint of $3.14 per share and a range of $3.09 to $3.19. Key assumptions include average quarter-end in-service occupancy of 94% to 95% and average cash same-store NOI growth of 5% to 6%.
At the midpoint, Musil said lease-up assumptions include 1.7 million square feet of developments plus a 708,000-square-foot vacancy in Central Pennsylvania, with those changes expected in the second half of the year. He also said that even if the company did not lease any of the 1.7 million square feet or the 708,000 square feet, it would still be within its FFO guidance range. Management said the Central Pennsylvania building is more likely to be leased to a single tenant but can be split for two, and the company is in discussions under either scenario.
Additional guidance items included projected bad debt expense of $1 million in 2026 (after $700,000 in 2025), capitalization of roughly $0.08 per share of interest, and G&A expense of $42 million to $43 million, with the first quarter expected to represent about 40% of full-year G&A due to equity compensation accounting.
The company also announced its board declared a first-quarter dividend of $0.50 per share, an increase of 12.4%, which management said aligns with anticipated cash flow growth.
About First Industrial Realty Trust (NYSE:FR)
First Industrial Realty Trust, Inc (NYSE: FR) is a publicly traded real estate investment trust focused on the ownership, operation and development of industrial real estate assets. The company specializes in light industrial, warehouse and distribution facilities that serve a broad range of end markets, including manufacturing, transportation and e-commerce. Through both acquisitions and ground-up developments, First Industrial seeks to assemble a diversified portfolio of strategically located properties that support its tenants’ supply-chain needs.
Core services provided by First Industrial include property leasing, asset management, redevelopment of obsolescent buildings and build-to-suit development for creditworthy users.
