Industrial Fundamentals Stabilize as Big-Box Leasing Surges

Executive Summary

• Leasing activity increased by 14% year-over-year in Q1 to 249.8 million sq. ft., putting the market on track for record volume in 2026.
• Net absorption rebounded year-over-year to 43.1 million sq. ft. in Q1 but was still below the long-term quarterly average as occupiers continued to optimize space.
• The overall industrial vacancy and availability rates increased year-over-year to 6.7% and 9.2%, respectively.
• Construction completions slowed to 55.4 million sq. ft. in Q1 but still outpaced absorption, while the construction pipeline increased by 7.5% quarter-over-quarter.
• Mega big-box facilities over 1.2 million sq. ft. drove leasing momentum, posting the strongest year-over-year gains. Small- and mid-sized formats saw less activity.
• While leasing fundamentals improved in Q1, rising geopolitical tensions are a downside risk to the overall market outlook.