As U.S. industrial real estate enters 2026, the sector stands on a foundation built in 2025: vacancy rates peaking and then firming, supply slowing and demand rebounding.

2025: A Year of Stabilization

The fourth quarter of 2025 marked a clear turning point. After a period of post-pandemic overbuilding, net absorption soared, leasing activity improved, and new deliveries slowed to their lowest levels since 2017.

Robust figures demonstrate this shift: a 29% year-over-year rise in Q4 net absorption, full-year deliveries down 35%, and national vacancy holding at 7.1%. These marks underscore a balanced, resilient sector poised for sustained recovery.

Demand Pillars Driving Growth

Three key forces underpin tenant activity and absorption trends:

• E-commerce and third-party logistics: With growth moderating to 5–6% YoY, retailers continue to expand logistics footprints as storefront counts decline.
• Manufacturing and reshoring: New leases in electronics, semiconductors, and defense surged in the Southeast and Central U.S., driven by nearshoring policies.
• Retail replenishment and essential goods: Large users absorb space for quick-turn inventories, favoring automation-ready facilities.

Supply Reset and Development Dynamics

Anyone monitoring construction trends will note a decisive shift: speculative starts have fallen sharply while custom build-to-suit projects now account for roughly 40% of under-construction space.

This recalibration arises from elevated construction costs and a widening gap between replacement-cost rents and existing Class A rates. As a result, developers prioritize projects in Texas and the Southeast, where land is available and incentives persist.

• Speculative development down to multi-year lows.
• Build-to-suit now 40% of under-construction space, driven by user-customized power and automation needs.
• Constraints in the Northeast and West push investors to emerging Sun Belt markets.

Regional Spotlights

Certain metros led absorption gains in 2025, each reflecting unique market dynamics and long-term potential.

• Dallas-Fort Worth: Logistics hub benefits from central location and extensive highway networks.
• Indianapolis: Cost-effective land and strong manufacturing base support build-to-suit growth.
• Phoenix: Over 22 msf under construction, with new power infrastructure easing constraints.

Looking Ahead: 2026 Forecast

Capitalizing on the momentum of late 2025, the industrial sector enters 2026 from a position of strength. With deliveries down more than 70% compared to pandemic peaks, demand is set to outstrip new supply.

Analysts predict sustained rent growth, though at more moderate levels, as the market returns to long-term historical norms. Large users continue prioritizing modern, power-capable assets, while data centers draw fresh investment.

Investor sentiment remains upbeat. Smaller vehicles and selective asset plays dominate allocations, reflecting a desire for control and yield stability even as interest rates hover above long-term averages.

Risks and Opportunities

Industrial real estate is not without headwinds. Trade policy uncertainty and tariff volatility may delay leasing decisions, though broadening supply chains mitigate some exposure.

Labor shortages and power infrastructure constraints challenge some regions, but automation investments and renewable energy projects offer solutions.

Overall, the sector’s broad-based absorption and slowing supply growth combine to create an attractive risk-return profile.

Conclusion: Building Tomorrow’s Foundations

As we move through 2026, the theme of “Concrete Returns” resonates across boardrooms and balance sheets. By balancing urban demand with selective development, and emphasizing high-power, automation-ready assets, industrial real estate offers stability and growth unlike any other commercial real estate sector today.