CORFAC: In The Face Of Uncertainty, Industrial Real Estate Is Poised For A Strong 2026

After rapid growth over the past several years, industrial real estate has started to settle down.  

National industrial vacancy rates held steady in Q3 at 7.1%. Average asking rents have cooled but remained positive overall, with 60% of all U.S. markets reporting gains last quarter. Investment dollars are flooding markets across the United States, including hundreds of billions for the development of new data centers and manufacturing facilities from the world’s biggest companies such as Apple and Nvidia.  

But even with all of the strides made this year, the industrial real estate landscape remains uneven. Many markets are still struggling with rising vacancy rates caused by overbuilding. Questions surrounding tariffs and interest rates are still up in the air.

As 2025 comes to an end, what’s on the mind of industrial brokers, developers and investors, and what are these players expecting in 2026? To gain perspective, Bisnow spoke to CORFAC International members across the U.S. 

“The industrial sector softened across the country over the last year,” said David Boyd, CCIM, SIOR, principal of Boyd Commercial LLC/CORFAC International. “It’s been a choppy market with a lot of uncertainty about tariffs and interest rates, which has caused many real estate decisions to be delayed.”

Amid uncertainty, he said the industrial market is holding steady in Houston, where Boyd Commercial is based.

Houston’s industrial net absorption is positive, even as leasing activity has moderated after the postpandemic spike. Boyd said all submarkets are faring well, with the strongest performers in proximity to Beltway 8, a toll road that connects to every freeway in the city. 

“As the region continues to grow in population, we have new rooftops being built in all directions, and that is now pulling industrial demand with it to the outlying areas,” he said. “We have all types of buyers seeking all types of industrial property.”

Boyd said heading into 2026, as a substantial amount of new construction continues to be delivered, vacancy rates may see a slight uptick. But by mid-year, he expects vacancy rates to decline. 

“Because we have some of the best industrial demand drivers in the country, including a pro-business environment, large population growth throughout Texas, the Port of Houston, and increased manufacturing diversification, the capital markets will be seeking deals in Houston,” he said.  

In the Southeast, Sim Doughtie, SIOR, CCIM, MCR, SLCR, president of King Industrial Realty Inc./CORFAC International, said it’s a different story. 

“The Atlanta industrial market is not normalizing,” he said. “It’s still in a state of decline.”

Doughtie said eight of the last 10 quarters have had negative net absorption. Despite this, activity overall has been healthy, with more than 57M SF of activity in the past year. Firms are still forging lease deals, he said, but activity is dominated by firms shedding space and downsizing. 

“This downsizing, along with the negative net absorption, has led to an increased availability rate of 13.8%, which equates to over 130M SF available in the Atlanta industrial marketplace,” Doughtie said. “This is the highest number recorded.”

The industrial investment market continues to be slow due to the high interest rate environment, Doughtie said, alongside compressed cap rates that have created negative leverage for investors needing financing to close their deals. However, it appears that investors are still looking for investment deals that are off-market sale-leasebacks, he said. 

As far as whether economic uncertainty is affecting deals in Atlanta, Doughtie said President Donald Trump’s tariffs are “definitely having a negative impact” — and may continue to do so if the rates are not finalized by year-end.

“We have had a number of transactions put on hold by our clients while they wait to get more clarity on tariffs,” he said. “We’ve even had clients send containers back to China rather than take delivery because it was cheaper to do so.”

In Chicago, Jerry Sullivan, principal, DarwinPW Realty/CORFAC International, said the industrial market remains strong as developers continue to gain confidence in the local markets. 

“There is a push by these developers to control more land,” Sullivan said. “This is definitely an indication that they may be bullish on spec development in 2026. We are seeing many of these developers looking at big-box buildings over a million square feet with predominantly 36-foot ceiling clearance.” 

Through the first three quarters of 2025, Chicago surpassed 2024’s total absorption by almost 3M SF. Its current vacancy rate is about 6%, but demand is still strong overall, with submarkets such as Joliet, Interstate 55 and O’Hare piquing investor interest, he said. 

In 2026, Sullivan said Chicago’s industrial market will be very active, experiencing more spec development as well as increased demand for indoor/outdoor storage and manufacturing.  

“Unless there is a major negative impact nationally or globally, there should be a lot of happy industrial real estate people in Chicago,” he said. 

In the Los Angeles area, Nick Buss, SIOR, principal at The Klabin Co./CORFAC International, said investors are shifting their expectations toward “higher-image” assets in prime areas, with aerospace, advanced manufacturing and technology users driving the bulk of demand.

“Class-A assets in areas such as Torrance are commanding strong rents, making them especially attractive to investors,” he said. “Class-B products in the transportation and third-party logistics corridors, including Carson, Compton, Los Angeles and Long Beach, have seen notable softening.”

Buss said Class-B buildings are struggling in the LA area — seeing both declining rents and demand — because logistics-focused users remain cautious amid shifting trade conditions and higher operating costs.

Tariffs have added a layer of uncertainty for many tenants, particularly 3PLs that rely on imports from China, Buss said. On the other hand, reshoring activity has increased modestly, with more manufacturers expanding production and development capacity in the region, he said.  

“This reshoring trend is driven not only by trade and tariff policies but also by ongoing global conflicts and advancements in defense-related technologies,” he said.

In 2026, Buss said he expects leasing activity to remain strong for ideally located Class-A facilities and functional Class-B facilities with ideal locations and efficient layouts. 

“More generic Class-B properties, catering to transportation and logistics users, will likely continue to face challenges as operators remain cautious about expansion,” he said. 

This article was produced in collaboration between CORFAC and Studio B. Bisnow news staff was not involved in the production of this content.

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