Industrial Demand Accelerates as Market Fundamentals Strengthen
Source: CBRE Research, Q3 2026.
Highest Quarterly Net Absorption Since 2022
Source: CBRE Research, Q3 2026.
Net absorption totaled 104.6 million sq. ft. in Q3, the highest quarterly total since Q4 2022 and well above the 10-year quarterly average of 82.9 million sq. ft. This brings the year-to-date total to 237.8 million sq. ft., up sharply from 97.7 million sq. ft. last year. Limited availability of first-generation space in some markets and increased renewal incentives are supporting existing facilities, although vacancies in older properties remain a challenge. Nevertheless, properties built between 2000 and 2019 recorded 13.9 million sq. ft. of positive net absorption in Q3.
Leasing Growth Extends Across All Size Segments
Source: CBRE Research, Q3 2026.
Leasing activity increased by 27.1% year-over-year in Q3 to 276.8 million sq. ft. Year-to-date leasing increased by 17.9% to 842.3 million sq. ft. Leases for 700,000 sq. ft. or more nearly doubled, while activity across smaller size ranges rose by an average of 9.7%.
Vacancy Rate Falls as Demand Rises
Source: CBRE Research, Q3 2026.
The industrial vacancy rate fell by 20 basis points (bps) year-over-year to 6.4%, while the availability rate fell by 30 bps to 8.9%. The declines reflect stronger demand and fewer new deliveries, even as some markets continue to work through recently completed speculative supply.
Demand Outpaces Deliveries Despite Growing Pipeline
Source: CBRE Research, Q3 2026.
Construction completions fell slightly year-over-year in Q3 to 79.4 million sq. ft. but were up substantially from 47.3 million sq. ft. in Q2. Nevertheless, year-to-date deliveries of 182.7 million sq. ft. were 17% below deliveries this time last year. Space under construction rose by 9.3% year-over-year to 278 million sq. ft.
Rent Growth Remains Modest
Source: CBRE Research, Q3 2026.
Average net asking rent increased by 3.6% year-over-year to $11.16 per sq. ft. Stronger leasing activity and improving market fundamentals supported rent growth, although vacancy in some markets continued to limit pricing power.
Capital Markets Activity Continues to Improve
Annual industrial investment volume is expected to increase by 15% year-over-year to $130.7 billion, based on strong activity throughout the first three quarters of this year. The average loan-to-value ratio rose to 60.5% in Q3 from 57.5% in Q2 and 59.6% a year ago.
Top Industrial Markets for Net Absorption, Growth Rate and New Construction
Source: CBRE Research, Q3 2026.
Dallas-Ft. Worth led the nation with 23.6 million sq. ft. of year-to-date net absorption, followed by Houston (18.1 million sq. ft.) and Atlanta (13.6 million sq. ft.). Demand improved across several major distribution hubs, although older building moveouts continued in markets with large amounts of first-generation inventory.
El Paso (3.3%) and California's Central Valley (3.1%) recorded the highest year-to-date growth rates. Cincinnati, Houston and Savannah followed at 2.9% each. This reflects strong demand across established logistics hubs like Houston and Savannah, as well as markets benefiting from manufacturing and cross-border trade activity, including El Paso and Cincinnati.
Dallas-Ft. Worth had the largest construction pipeline at 34.4 million sq. ft., followed by Phoenix (20.5 million sq. ft.) and Houston (18.4 million sq. ft.). These markets will be important indicators of how quickly demand can absorb the next wave of deliveries.
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