U.S. Industrial Market Stabilizing As Leasing Ramps Up

The tide seems to be starting to shift for a real estate asset class that has been burdened by oversupply over the past few years. 

Industrial vacancy nationwide is flattening, Cushman & Wakefield’s first-quarter report shows, as the sector benefits from strong leasing activity and a slowdown in new buildings coming online. 

“With new supply moderating and leasing holding firm, the market is moving back toward balance,” Cushman & Wakefield President for Logistics and Industrial Jason Tolliver said in a release put out by the brokerage Wednesday. 

“That is creating a clear inflection point where available space should begin to tighten, reinforcing investor confidence and keeping capital active in the sector,” he added. 

Vacancy for industrial space — including warehouses, hangars and storage lots — across the country sat at 7% as of the end of March, the report found. That represented a 10-basis-point drop from its late 2025 peak.

The 174M SF of new industrial leasing activity recorded in Q1 was the most for a first quarter since 2022, when the sector recorded 240M SF of activity, according to C&W.

It continued the momentum from the final quarter of 2025, in which leasing activity totaled nearly 190M SF, the highest for any quarter in more than three years.

For new leases, tenants are showing a strong preference for recently completed industrial product and larger blocks, Cushman found. Of the first quarter's 174M SF of new leasing activity, 68M SF was for space constructed after 2020. And nearly half of the leased space was for blocks of more than 500K SF. 

This comes from tenants’ desire for automation-ready facilities with higher power capacity, the report says.

New leasing is outpacing the amount of space being given back to the market. The quarter showed 40M SF of positive net absorption. 

Just 54M SF of new supply came online during the quarter, the lowest volume since mid-2017. But that is expected to pick up in the months ahead, the report says, as renewed fundamentals have pushed developers to begin more projects. 

There is now 284M SF of industrial space under construction, the most since the third quarter of 2024 and up 6.2% year-over-year. 

While the industrial vacancy rate of 7% appears to be stabilizing for now, it is still significantly elevated from the 3.3% the sector recorded in Q1 2022. Previous brokerage estimates had pinpointed mid-2025 as the beginning of a turnaround for industrial vacancy.

A separate 2026 projection report Cushman released earlier this year said industrial vacancy should start to decline in 2027.