For the data behind the commentary, download the full Q3 2026 U.S. Industrial Report.
Despite Economic Uncertainties, Industrial Demand Accelerates
Net absorption accelerated to 76.6 msf in Q3, its strongest quarter since Q1 2023. Demand exceeded 70 msf for a second consecutive quarter, lifting the YTD total to 203 msf, 69% higher than the first three quarters of 2025. Inland markets are driving activity, accounting for 80% of YTD absorption. Port markets are also improving, with YTD demand already surpassing the full-year 2025 total, led by third-quarter surges in Houston, New Jersey, the Inland Empire, Savannah and Miami.
Newer product continues to attract the strongest demand, with 202 msf of YTD net absorption in warehouses built this decade. However, as availability in newer facilities tightens, demand is beginning to spill over into older properties. Warehouses built from 2000 through 2019, which experienced steady occupancy losses over the previous two years, are now showing signs of stabilization.
New leasing YTD is 21% above last year’s pace. The surge in AI buildouts, resilient consumer spending, and nearshoring and onshoring has propelled leasing activity to its strongest six-month period in more than four years. Demand has been led by 3PL, manufacturing, e-commerce and data center-related tenants. Manufacturers remained the second most active tenant type through the first three quarters of 2026 as they continue to build out and evolve their supply chains nationwide. After accounting for 23% of annual leasing volume the previous three years, manufacturing companies represented more than one-fourth of YTD 2026 activity. Tenants looking for large format warehouses have been particularly active, with transactions above 500,000 sf making up more than one-third of YTD leasing volume.
Nationwide Vacancy Drifts Further Below Its Recent Peak
With demand outpacing new supply for two straight quarters, U.S. industrial vacancy has fallen 20 bps from its late-2025 peak of 7%. At 6.8%, the rate is at its lowest point since year-end 2024 and is expected to decline modestly by the end of 2026. Vacancy fell by 100 bps or more YOY in 14 U.S. markets, including Indianapolis, Columbus, Phoenix, Central Valley and Philadelphia.
Larger facilities have led the compression. Vacancy in buildings of 500,000 sf or more fell 280 bps YOY to 7.4%, while the mid-sized segment (300,000–500,000 sf) is also stabilizing, with vacancy down 50 bps.
Asking rental rate growth reached 4% nationwide in Q3, up from roughly 1% during the second half of 2025 and marking the third consecutive quarter of acceleration. Strong gains in the South and Midwest contributed. Of the 83 markets tracked, 13 reported double-digit YOY growth in Q3, led by Dallas-Fort Worth at 20%. St. Louis, Louisville, Tampa, Raleigh-Durham and Indianapolis all posted annual rent growth above 10%. Conversely, rents continued to soften in some key coastal markets in California, New Jersey and Miami.
New Deliveries Remain Modest, But the Pipeline Is Expanding
New supply remained modest, with nearly 64 msf of completions in Q3. The YTD total of 185 msf is down 13% YOY. Texas accounted for one-fourth of U.S. deliveries in 2026 (47 msf), while five other inland markets each recorded more than 5 msf of completions: the PA I-81/I-78 Corridor, Chicago, Atlanta, Phoenix and Louisville. In some smaller markets, including El Paso, Fredericksburg, Boise and Raleigh-Durham, YTD completions equal more than 3% of their current inventories.
As leasing activity strengthens and vacancy stabilizes, developers are growing more confident. The pipeline rose 23% YOY to 324 msf, its highest level since mid-2024. Pipelines grew YOY in half of U.S. markets, including 14 with gains of more than 100%. Build-to-suit projects make up about 35% of the overall pipeline and more than 55% of the large-format pipeline (500,000 sf or more), as large logistics tenants seek customized facilities for long-term needs.
For the data behind the commentary, download the full Q3 2026 U.S. Industrial Report.
