The Glut Of Big-Box Warehouses Is Finally Getting 'Gobbled Up'

After a year of caution, America’s industrial occupiers are once again taking leaps by signing megadeals. The tenants are backfilling the surplus of big-box warehouses that were built to meet projected post-pandemic demand before tariffs and a war in the Middle East reset market expectations. 

Deals for more than 500K SF are now driving activity in the sector, and users of the largest spaces are being squeezed for rent hikes at a faster pace than their smaller peers. The supply of large buildings built during the pandemic is quickly being absorbed by strong demand, which is returning pricing power to landlords. 

“We saw the vacancy almost evaporate in many markets where there were a number of big boxes available,” said Stephanie Rodriguez, the national director for industrial services at Colliers. “All of a sudden, they were gobbled up.”

Vacancy for warehouses 750K SF and larger dipped year-over-year in the first quarter to 7.3% from 8.3%, while those ranging from 200K SF to 500K SF posted 10.9% vacancy, up slightly from the prior year, according to Savills.

The abundance of large deals pushed total leasing to highs not seen since the first half of 2022. Overall industrial leasing activity reached 490M SF in the first half, up 27% from 2025, according to Savills. The overall U.S. vacancy rate was essentially flat year-over-year at 8.2% in June. 

It is a marked reversal for the sector, which has been navigating the fallout of a pandemic-era supply boom that met a drop in demand just a few years later.

Adding to the turmoil is a roller coaster macroeconomic backdrop defined by volatility since President Donald Trump won a second term in the White House and set to work issuing tariffs against trade partners and kicking off a campaign of mass deportations. Amid record uncertainty, large operators pulled back as the dust settled while everyone else muddled along.

The war between the U.S. and Iran, which dragged closer to an impasse this month, with both sides once again closing the Strait of Hormuz, and the associated run-up of energy prices have only created more problems for logistics firms. 

The whipsaw tariff regime stunted leasing activity for a spell, but users have more recently eaten away at the record 1.5B SF that has come online without a tenant in place. The war has actually added tailwinds to the industrial sector’s recovery, according to a Colliers report.

“Because of what’s happening now with the supply chain wanting to have goods on hand, the turbulence may be in trade policy and other geopolitical things, but users seem to be coming back and wanting larger spaces, which are in short supply,” CompStak Senior Director of Real Estate Intelligence Alie Baumann said.

Companies stockpiling supplies began taking excess industrial space shortly after the conflict began, hedging against higher transportation costs if the war dragged on, and the ongoing fighting has simultaneously boosted the president’s push to bring advanced manufacturing investment to the U.S. 

Tesla signed a 682K SF lease in Austin last week, taking the region’s largest-ever speculative development off the market. Invesco landed a tenant in a $42M lease the same week for a 522K SF industrial property in California’s Inland Empire.  

A large portion of demand is coming from third-party logistics companies, which can help distributors scale quickly, and the ecosystem of vendors that support data center development and operations, said Lisa Pittman, an executive managing director at Cushman & Wakefield who works on national industrial deals from an office in Atlanta. 

Third-party logistics firms leased more than 30M SF in the first quarter, roughly 20% of all leasing activity and a 65% jump in their volume from the prior year, JLL found. 

What has emerged nationally is a generally balanced market that has been driven by massive leases in 2026. Smaller tenants have only recently returned to the market in force, Pittman said. 

“In the last 60 days, that's picked up. It was feast or famine,” she said of smaller transactions, with the market previously dominated by leases of more than 800K SF and demand being weaker for spaces of fewer than 500K SF. “We are now seeing really healthy activity across all size ranges.”

Lease escalations for renewals on leases 500K SF or larger averaged 84% in the first quarter, more than double the pace of rent growth for smaller renewals, according to data from CompStak. 

As those terms reset now, those occupiers are only now confronting the massive pandemic-era increase in rates that most smaller occupiers already absorbed, Baumann said.  

The flight to quality that is defining the office sector is also apparent in industrial, with some tenants consolidating operations in older facilities into new properties that offer better amenities and more storage per square foot with higher ceilings. The average Class-A lease size, at 210K SF, surged to its highest point since 2022 in the first quarter and is 16.5% above the 2019 baseline, while deals for lower-class properties remain stable, with leases around 60K SF. 

“The prior two years, big-box was struggling a bit. People weren't willing to take those larger bets,” Rodriguez said. “But starting in the second half of 2025 and propelling us into 2026, that new leasing of those big boxes accelerated probably to the strongest level since 2022.”

Tenants facing lease expirations are launching exhaustive searches and exploring wholesale reorganizations of their logistics networks to be optimized for a post-pandemic market. Occupiers today are being especially critical of their space decisions, and that takes time, Rodriguez said. 

Lease negotiations at Prologis averaged 59 days in the first quarter, above the 54-day average over the last seven years and edging higher over the past few quarters.

“It's still fairly slow when it comes to tenants taking space,” she said. “It's a very long and arduous process.”