Net absorption reaches strongest quarterly level since early 2023 as leasing activity remains elevated and new construction rebounds
New York – U.S. industrial demand accelerated in the third quarter of 2026, outpacing new supply for the second consecutive quarter and pushing vacancy further below its recent peak, according to new research from Cushman & Wakefield.
Net absorption reached 76.6 million square feet (msf) in the third quarter, its strongest quarterly total since the first quarter of 2023 and the second consecutive quarter above 70 msf. Year-to-date (YTD) absorption surpassed 203 msf, marking the market’s strongest nine-month stretch since late 2022.
“Demand has now outpaced new supply for two consecutive quarters, and we’re seeing that translate into lower vacancy, stronger leasing activity and renewed development momentum,” said Jason Price, Head of Americas Logistics & Industrial Research at Cushman & Wakefield. “Newer, highly functional facilities continue to capture the majority of demand, although tightening availability is beginning to create some spillover into older product.”
Inland markets accounted for approximately 80% of YTD net absorption, while demand also strengthened across major port markets including Houston, New Jersey, the Inland Empire, Savannah and Miami. Demand across port markets has already exceeded full-year 2025 levels by 3% YTD.
Flight to Quality Continues
Warehouses built since 2020 accounted for approximately 202 msf of year-to-date net absorption as major occupiers continued to prioritize facilities capable of supporting automation, efficiency and evolving logistics requirements.
Data center and AI infrastructure development has also emerged as a significant industrial demand driver. Data center-related users accounted for more than 8% of new leasing activity year to date, as companies that service, supply and distribute equipment, parts and components for AI infrastructure expand in and around major data center markets.
As newer space tightens, demand has begun to spill into facilities built between 2000 and 2019. After recording approximately 78 msf of occupancy losses during 2024 and 2025, that segment is showing signs of stabilization in 2026.
More than one-third of square footage leased year to date has involved transactions of at least 500,000 square feet (sf), and approximately 75% of those large-format deals occurred in buildings developed since 2020.
“3PLs and manufacturers continue to adjust their supply chains and logistics networks across markets to reduce disruption risk and improve resilience,” said Jason Tolliver, President of Logistics & Industrial at Cushman & Wakefield. “That is keeping location strategy, building functionality and long-term flexibility at the center of industrial real estate decisions.”
Leasing Activity Remains Strong
New leasing volume surpassed 200 msf for the second consecutive quarter, producing the strongest six-month period since the first half of 2022. Over the past four quarters, approximately 810 msf of new leases have been completed nationwide, the strongest 12-month total since 2022.
Vacancy Continues to Retreat
The national industrial vacancy rate declined to 6.8%, 20 basis points below its late-2025 peak and its lowest level since year-end 2024.
Improvement has been particularly pronounced among larger facilities, with vacancy in properties of 500,000 sf or more falling 280 basis points year-over-year to 7.4%. Vacancy in the 300,000- to 500,000-sf segment has also declined 50 basis points from a year earlier.
New Supply Slows as Construction Pipeline Rebuilds
Approximately 64 msf of new industrial space was completed during the third quarter, pushing year-to-date completions to about 185 msf, down 13% from the same period in 2025. Texas markets accounted for approximately 47 msf of those deliveries, or one-quarter of the U.S. total.
Meanwhile, the U.S. construction pipeline increased 6% from the second quarter to approximately 324 msf, its highest level since mid-2024 and up 23% year-over-year. Build-to-suit projects represent approximately 35% of the overall pipeline and more than 55% of space underway in facilities of at least 500,000 sf.
Asking Rent Growth Reaccelerates
As vacancy tightens and demand improves, annual asking rent growth reached 4% nationwide. Among the 83 U.S. markets tracked by Cushman & Wakefield, 74% recorded positive year-over-year asking rent growth, up from 70% in the second quarter.
Looking ahead, while some downside risks persist, the U.S. industrial market appears to be in the early stages of a new growth cycle, supported by shifting structural demand, AI-related activity and steady consumer demand. Vacancy is expected to tighten modestly further by year-end as new supply remains subdued and demand continues to edge higher.
