U.S. industrial demand accelerates as vacancy falls - Institutional Real Estate, Inc.

The U.S. industrial market entered the second half of 2026 with renewed momentum, as national vacancy declined for the first time since the post-pandemic peak. Industry reports cite differing magnitudes. One Q2 2026 market dynamics report puts the national vacancy rate at 6.8%, a 60 basis point compression and the first meaningful contraction since mid-2023. A separate MarketBeat report puts the Q2 figure at 6.9%, a 10 basis point decline, and characterizes the turn as a sign that vacancy has likely passed its cyclical peak. Both figures follow a period of sustained increases, with vacancy reaching 7.6% in Q4 2025 after rising for thirteen consecutive quarters, according to a separate Q4 2025 report.

Avison Young's H1 2026 U.S. industrial market report attributes the shift to stronger tenant demand and limited new supply. Gross leasing volumes ran 25.6% above the pre-COVID 10-year H1 average. Leasing was especially strong in the big-box segment, where activity for buildings over 500,000 square feet rose nearly 30% compared with H1 2025. As available large-format space is absorbed, occupiers face fewer options in markets once considered oversupplied. The firm also cites e-commerce sales at record levels, federal incentives supporting manufacturing investment, and data center construction as additional demand drivers.

Supply remains restrained. Avison Young reports that new development is still well below the pandemic-era peak, and that the construction pipeline was flat for six quarters before Q2 2026 activity rose 12.0% above the post-Q4 2024 average. Developers are also increasing land acquisitions ahead of groundbreaking, which the firm suggests could accelerate construction starts in the second half of 2026. Taken together, Avison Young expects a more competitive industrial market through 2027, with leasing expected to strengthen further in markets positioned to capture new manufacturing activity.

Not all forecasters share the same outlook. CoStar expects U.S. industrial demand to outpace supply, but notes that national vacancy remains in the mid-7% range entering Q3 2026 and is expected to edge higher into 2027. Other commentary has questioned whether the industrial real estate boom has ended, noting that the post-2020 run-up was among the largest in the sector's history and that construction deliveries have contributed to higher vacancy relative to historic lows. The durability of the current vacancy decline will therefore depend on whether leasing momentum holds as the development pipeline reactivates.