As 2025 comes to a close, marking a volatile year for the U.S. industrial property sector, market trends promise to keep things interesting in 2026.
Despite construction moderating, the aftereffects of an elevated logistics pipeline will reverberate into 2026, extending the supply overhang for larger warehouse and distribution properties. Meanwhile, next year is expected to see a continued shift in property performance between small bay and bulk distribution properties, along with an increased concentration in data center development.
Despite a decrease of more than 60% from the 2022 peak in the number of under-construction logistics properties that are 100,000 square feet or larger, the amount of available speculative supply remains high. Over 55% of that under-construction space is vacant, totaling more than 189 million square feet, which is double the pre-pandemic maximum.
These trends, coupled with a rising focus on data center development, are expected to reshape the industrial landscape in the year ahead.
In fact, since 2023, construction spending on data centers has surged while warehouse spending has cooled, with data centers poised to surpass warehouses in 2026.
The significant power requirements of data centers, projected to reach 12% of national demand by 2028, up from just over 4% in 2023, according to the Berkeley Lab, are expected to intensify competition for electricity among industrial occupiers.
Logistics tenants deploying robotics and onshoring manufacturers expanding operations will further add to the strain on the power grid, benefiting sites with robust power infrastructure.
In all, while data centers emerge as the dominant growth story, supply chain considerations will increasingly take a backseat to power availability in the site selection process.
Additionally, logistics properties face prolonged absorption timelines, particularly in mid-sized segments, while inland and East Coast distribution hubs are expected to gain ground over West Coast port markets.
That said, improving demand in the latter half of 2026 offers some relief from elevated vacancy and increasing sublease availability, potentially resulting in the return of national rent growth by 2027.
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