Q2: U.S. Industrial Market Moves Toward Balance as Demand Outpaces New Supply

The U.S. industrial market showed signs of stabilization in the second quarter of 2026, with demand beginning to outpace new deliveries while developers remained disciplined about adding new supply.

Quarterly reports from CBRE, Colliers, Cushman & Wakefield, JLL and Lee & Associates discuss a sector that is moving beyond the oversupply concerns of the past two years.

Vacancy Stabilizes, Demand Improves

After steadily increasing for the past several quarters, the national industrial vacancy rate stabilized in Q2. Increased demand for larger warehouse and distribution facilities helped vacancy decline from its late 2024 peak.

At the same time, shallow-bay industrial product experienced a modest increase in vacancy, although availability remains relatively tight compared with historical levels.

Absorption Outpaces Deliveries

For the first time in several quarters, industrial demand outpaced new deliveries, suggesting a market moving closer to equilibrium. Leasing activity also expanded beyond pre-committed space, as tenants absorbed recently completed speculative projects at a faster pace.

Third-party logistics providers remained the largest source of industrial leasing activity during the first half of 2026, while manufacturers also contributed to demand growth. Meanwhile, leasing from general retailers and wholesalers declined as more companies continued to outsource their distribution operations to third parties.

Developers Maintain Discipline

Although the industrial construction pipeline has increased over the past year, development activity has become less frantic and more reasonable, relative to the recent boom cycle.

Much of the space currently under construction consists of build-to-suit projects and larger speculative developments of 200,000 square feet or more. Developers have also become more cautious about launching new projects due to elevated interest rates and rising material costs.

Outlook: Gradual Growth Ahead

Ongoing demand growth and restrained supply mean that the industrial market is expected to continue moving toward balance through the remainder of 2026.

Vacancy is forecast to decline modestly as new deliveries remain limited. Rental growth should also remain relatively stable.

Several demand drivers could support expansion, including increased defense spending, national infrastructure initiatives, and the ongoing development of data centers and related support facilities.

Construction activity is also expected to remain more balanced than in recent years. While a broader rebound in development will likely depend on stronger rent growth and improved market conditions, industrial real estate remains positioned for expansion despite ongoing macroeconomic uncertainty.