For the data behind the commentary, download the full Q1 2026 U.S. Industrial Report.
Balanced Supply and Demand Support Ongoing Industrial Growth
Building on late-2025 momentum, the U.S. industrial market posted its strongest first quarter in three years, with 40 msf of net absorption. Total absorption over the past 12 months reached 198 msf, up 35% YOY. Demand continues to shift toward newer warehouse product as occupiers upgrade space for automation, AI systems and higher power requirements. Properties delivered since 2020 accounted for 68 msf of quarterly absorption, with nearly half occurring in facilities larger than 500,000 sf.
Trade policy shifts and heightened geopolitical uncertainty are reinforcing inland supply chain strategies. Markets such as Dallas/Ft. Worth, Indianapolis, Phoenix, Atlanta and Charlotte led absorption gains during the quarter, while several West Coast markets saw occupancy declines amid consolidations and relocations.
Leasing activity remained elevated, surpassing 170 msf for the fourth straight quarter. Large-format (500,000 sf and above) activity stayed robust, with more than 40 transactions completed for a third consecutive quarter and over 50 leases signed for the first time since mid-2022. Of those, three quarters were concentrated in newer buildings, and more than half were in facilities with 40-foot clear heights. Third-party logistics users and manufacturers represented 60% of large-format leasing volume, while inland markets accounted for 70% of quarterly activity. Additionally, companies supporting data center infrastructure have emerged as a meaningful source of demand in several key markets, including Dallas/Ft. Worth, Phoenix, Virginia and Atlanta, particularly in the 30,000- to 400,000-sf segment.
Market Vacancy Now Below Cyclical Peak
With steady demand, moderating completions and fewer vacant sublease blocks, national vacancy has likely moved past its cyclical peak. Vacancy ended the first quarter at 7.0%, unchanged from year-end but 10 bps below the third-quarter 2025 peak. Large-format space continues to pull the national rate lower, while other size cohorts saw only modest increases early in the year. Warehouses larger than 500,000 sf posted a 210-bps YOY decline, bringing vacancy for this segment to 8.7%. Vacancy in newly built buildings fell by 480 YOY, while vacancy in older product rose 70 bps but remains tight at just 5.6%.
As fundamentals stabilized, asking rents continued to tick moderately higher to $10.20 per square foot (psf). Rental rate growth registered a 2.1% YOY increase, up from 1.1% at year-end 2025. Of the 83 markets tracked by Cushman & Wakefield, 60% reported positive annual rent growth in Q1, with 19 markets exceeding 5%. By comparison, 55% of U.S. markets saw YOY gains at year-end 2025. Despite higher vacancy rates, port-proximate markets continue to command a significant premium, with rents approximately 55% above the rest of the market.
Disciplined Pipeline Eases New Supply Total
New supply continued to slow, with completions down 27% YOY to 54 msf—the lowest quarterly total since mid-2017. Approximately 73% of deliveries were speculative, up slightly from 71% in 2025. While completions should remain modest through 2026, renewed groundbreakings in markets with healthy demand lifted the national development pipeline for a third straight quarter.
Space under construction totaled 284 msf, up 6.2% annually, reaching its highest level since the third quarter of 2024, with notable increases in St. Louis, Columbus, Minneapolis and Charlotte. Two-thirds of the build-to-suit (BTS) pipeline are concentrated in facilities of 500,000 sf or larger, including six manufacturing facilities exceeding 1.0 msf.
For the data behind the commentary, download the full Q1 2026 U.S. Industrial Report.
