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Q2 2026 U.S. Industrial & Logistics Market Report

July 29, 2026 5 Minute Read

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Industrial Fundamentals Improve as Supply & Demand Rebalance

Note: Arrows indicate year-over-year change. LTV ratio is for permanent loans only.
Source: CBRE Research, Q2 2026.

Occupier Demand Tightens Market Conditions

Source: CBRE Research, Q2 2026.

The industrial vacancy rate fell by 20 basis points (bps) quarter-over-quarter in Q2 to 6.5%, marking the first decline since Q2 2022. Robust demand for big-box space and a significant slowdown in construction drove the decline. The availability rate also edged lower quarter-over-quarter due to fewer moveouts from older buildings and increased renewals. Ongoing supply chain uncertainty is driving tenants to take advantage of growing landlord concessions and hold more space.

Big-Box Leasing Surges

Source: CBRE Research, Q2 2026.

Leasing activity increased by 11% year-over-year in Q2 to 268.7 million sq. ft. and by 18% in H1 to 547.9 million sq. ft. Leases for 700,000 sq. ft. or more in H1 surged by 125% year-over-year, along with gains for all other size ranges. Thirty-eight leases of 1 million sq. ft. or more were signed in H1, more than double the number in H1 2025. Declining first-generation inventory is expected to stabilize leasing in H2.

Occupier Demand Broadens Beyond Traditional Logistics

Source: CBRE Research, Q2 2026.

3PLs remained the largest source of leasing activity in H1; however, their share of overall activity fell as other sectors became more active. For example, demand from manufacturers rose to more than 12% of total leasing volume. In contrast, demand from general retailers & wholesalers fell due to continued distribution outsourcing. Data center support, national infrastructure projects and growing defense spending are expected to drive manufacturing demand in the coming quarters.

Space Under Construction Rises Slightly

Source: CBRE Research, Q2 2026.

Space under construction increased slightly year-over-year to 252.2 million sq. ft. due to 58 million sq. ft. of construction starts, the highest level in three years. Slowing supply and strengthening demand reflect a more balanced construction pace, but a full construction rebound will require broader rent gains. Construction completions fell to 47.9 million sq. ft. in Q2, the lowest quarterly total since 2016. Net absorption of 85.1 million sq. ft. marked the first quarter since Q2 2022 that demand outpaced completions.

Top Industrial Markets for Net Absorption, Growth Rate and New Construction

Note: Arrows indicate year-over-year change.
Source: CBRE Research, Q2 2026.

Dallas-Ft. Worth, Houston and Phoenix were the top markets for net absorption in H1, driven by robust demand for first-generation big-box space.

El Paso, California's Central Valley and Indianapolis had the highest net-absorption growth rates, reflecting continued investment in strategically located distribution and manufacturing regions. El Paso's expansion in particular underscores the growing importance of North American supply chains, with expanding manufacturing production in Mexico driving greater cross-border freight volumes and increasing demand for space along key north-south trade corridors.

Dallas-Ft. Worth, Phoenix and Indianapolis were among the top markets for space under construction, as occupiers continued to favor regions with long-term population growth, expanding manufacturing investment and established transportation infrastructure.

Capital Markets Recovery Gains Momentum

Source: CBRE Research, Q2 2026.

Capital markets activity continued to recover in H1 2026, with investment volume forecast to rise by 15% year-over-year to $134.6 billion. Improving investor confidence and greater certainty around pricing have supported a gradual increase in investment activity. The average loan-to-value ratio fell to 57.5% in Q2 from 60.1% in Q1 and 58.5% a year ago.

 

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