For the data behind the commentary, download the full Q2 2026 U.S. Industrial Report.
Demand Continues to Build Momentum
U.S. industrial fundamentals continued to strengthen, with net absorption surpassing 60 msf for the second time in three quarters. The four-quarter rolling total reached 236 msf, 17.3% above the post-pandemic (2023-2025) average of 201 msf. Growth remained concentrated in newer facilities as occupiers prioritize higher clear heights for operational efficiency and greater power capacity to support automation and AI systems. YTD net absorption in warehouses built since 2020 totaled 137 msf, with large-format facilities of 500,000 sf or more accounting for nearly half of that activity, or 62.4 msf.
Demand has become increasingly broad-based, with nine markets recording net absorption above 5 msf YTD. Inland logistics hubs—including Dallas-Fort Worth, Phoenix, Atlanta, and several Midwest markets—continued to outperform as companies optimize supply chains through onshoring, nearshoring and evolving trade strategies. At the same time, major port markets—including Houston, New Jersey, Los Angeles and Savannah—reported healthy YTD absorption gains, reflecting resilient import activity as businesses adapt to the new tariff environment.
Despite extended transaction timelines, tenant leasing activity remained brisk. New leasing volume reached its highest level since mid-2022, lifting YTD activity to a four-year high, up 16% YOY. Nine markets have recorded more than 10 msf of leasing activity since the start of 2026, led by Dallas-Fort Worth (40.3 msf), the Inland Empire (28.5 msf) and Chicago (21.8 msf). Third-party logistics (3PL) providers and manufacturers expanding their supply chains drove deal volume, representing more than 55% of total activity YTD.
Healthier Demand and Shrinking Sublease Space Drive Vacancy Lower
The U.S. industrial vacancy rate fell 10 bps to 6.9% at midyear, signaling that the market has moved beyond its cyclical peak as demand accelerated, new supply remained modest, and sublease availability continued to decline. Three of the four U.S. regions posted modest vacancy improvements, with only the Northeast posting a slight increase of 10 bps. Vacant sublease space fell to its lowest level since Q3 2024, down 5% QOQ as occupiers continued to lease or withdraw available space from the market.
Strong demand for large-format facilities is helping push vacancy lower. Vacancy in buildings larger than 500,000 sf has declined 300 bps from its late-2024 peak to 8.1%, supported by robust leasing from third-party logistics providers and manufacturers. By contrast, vacancy in shallow-bay product edged modestly higher but remains exceptionally tight at 4.8%, the lowest of any size segment.
With demand firming and overall vacancy improving, industrial rent growth continued to recover after bottoming in late 2025. National asking rents rose 2.9% YOY, up from 2.1% in the prior quarter. Rent gains also became more broad-based, with 67% of the 83 markets tracked by Cushman & Wakefield Research reporting positive annual rent growth, up from 58% at year-end 2025. While rent growth has moderated from the extraordinary pace seen during the pandemic, the longer-term trajectory remains impressive. Over the past five years, average U.S. asking rents have increased 47%, with 12 markets posting gains above 60%. The strongest five-year rent growth has come in Philadelphia (96%), Nashville (82%) and Ft. Lauderdale (77%).
While New Deliveries Remain Modest, the Construction Pipeline Is Growing
New supply remained modest at midyear, with Q2 deliveries totaling 62 msf, up 8.3% QOQ but down 16% YOY. First-half deliveries reached 119 msf, 19.2% below the first half of 2025, with the South accounting for half of new construction YTD. The pipeline rose for a fourth straight quarter to 305 msf, up 18% YOY. Build-to-suit (BTS) activity increased 15% YOY, while stronger leasing and stabilizing vacancy rates have begun to restore developer confidence, driving an 11% QOQ rise in speculative construction.
For the data behind the commentary, download the full Q2 2026 U.S. Industrial Report.
