The U.S. industrial sector continued to move toward a healthier balance between supply and demand in the second quarter of 2026, according to new quarterly research from CBRE, Colliers, Cushman & Wakefield, JLL and Lee & Associates. After several years of concerns about overbuilding, the latest data indicates that new space is being absorbed more effectively as occupier demand firms.
National industrial vacancy, which had been rising steadily through late 2024, leveled off in the second quarter and began to edge lower. Stronger requirements for large warehouse and distribution facilities helped reverse some of the earlier vacancy increases, particularly in bulk logistics product. This improvement contrasts with the experience of shallow-bay industrial space, where vacancy posted a modest uptick but still compares favorably with longer-term averages.
Net absorption outpaced new deliveries for the first time in several quarters, a shift that points to a market moving closer to equilibrium. Tenants expanded leasing activity beyond space that had been pre-committed prior to construction, taking down a greater share of recently completed speculative projects. This pattern suggests that newer supply is being digested more smoothly than during the peak of the oversupply concerns.
Third-party logistics providers remained the leading source of industrial leasing during the first half of 2026, reinforcing the central role of outsourced logistics in the occupier mix. Manufacturers also added to demand, reflecting ongoing investment in production and distribution networks. In contrast, general retailers and wholesalers reduced their direct leasing activity as they continued to shift fulfillment functions to logistics specialists.
On the development side, the construction pipeline has grown over the past year but is described as more measured than during the previous boom. Projects under way are heavily weighted toward build-to-suit facilities and larger speculative buildings of 200,000 square feet or more, rather than broad-based speculative construction across subtypes. Developers are taking a more cautious stance on launching additional projects in the face of higher interest rates and increased material costs.
Forward-looking expectations call for gradual improvement rather than a sharp inflection. Analysts anticipate that vacancy will drift lower through the remainder of 2026 as new deliveries remain constrained and existing space is absorbed. Rent growth is expected to hold relatively steady under these conditions, supported by consistent demand and moderated supply.
Several structural demand drivers are identified as potential supports for further expansion. These include higher defense spending, ongoing national infrastructure initiatives and the continued build-out of data centers and related support facilities that rely on industrial space. While a more pronounced rebound in development is likely to depend on stronger rent growth and a more favorable macroeconomic backdrop, the industrial sector is described as being positioned for continued expansion even as broader economic uncertainty persists.
