Industrial Real Estate Thrives Despite Economic Volatility

Published: 01/20/2026
Industrial Real Estate Logistics Warehousing Market Analysis
Cushman & Wakefield's report indicates a robust US industrial real estate market in Q2, driven by logistics demand and a preference for high-quality assets. Despite pressures in the Western region, the overall leasing market remained stable with a gradual increase, accompanied by a slowdown in supply. Experts believe that tariff easing and rental adjustments are boosting market confidence. The market is expected to continue adjusting in the future, presenting both opportunities and challenges. The report highlights the resilience of the sector and its ability to adapt to evolving economic conditions.
Industrial Real Estate Thrives Despite Economic Volatility

The U.S. industrial real estate market continues to demonstrate surprising resilience, with new data revealing sustained demand despite broader economic headwinds. Recent findings from Cushman & Wakefield's Q2 Industrial Market Report highlight a sector buoyed by logistics growth and shifting supply dynamics.

Demand Resilience: Logistics Sector Drives Absorption

The market recorded 29.9 million square feet of net absorption in Q2, nearly matching Q1's 30.3 million square feet. This stability defied many analysts' expectations, particularly as post-2023 construction logistics facilities accounted for over 50 million square feet of absorption.

"Modern logistics facilities with advanced technology and prime locations are outperforming older inventory," the report noted, emphasizing how e-commerce evolution continues reshaping space requirements.

Regional Divergence: West Faces Adjustment Period

While national trends remain positive, regional disparities emerged. Western markets saw negative 2.3 million square feet of net absorption, with Inland Empire and Los Angeles declining by 1.8 million and 1.1 million square feet respectively. This suggests ongoing corporate realignment rather than systemic weakness.

Key Market Indicators Show Balanced Growth

Several metrics point to market stabilization:

Leasing Activity: Year-to-date new leasing reached 309 million square feet, up 0.3% year-over-year. Q2 leasing totaled 157 million square feet, with seven major markets exceeding 500,000 square feet.
New Supply: Q2 completions fell 44.6% year-over-year to 71.5 million square feet, with Southern and Western regions accounting for 68% of deliveries - down from their 2023 Q3 peak.
Vacancy Rates: The national industrial vacancy rate edged up 0.1% to 7.1%, while smaller facilities (under 100,000 sq ft) maintained tighter vacancies at 4.4%.
Rent Trends: Average asking rents grew 2.6% year-over-year to $10.12 per square foot, with smaller spaces commanding a 31% premium at $13.51.

Expert Analysis: Tariff Relief Supports Market

"Q2 demand benefited from eased tariffs and new trade agreements," said Jason Price, Cushman & Wakefield's Americas Head of Logistics & Industrial Research. "Rent adjustments are allowing tenants to secure more favorable terms than a year ago."

Price noted that reduced speculative construction (down to 62.3% of new supply from 66.0%) contributes to market stability. While some markets face consolidation challenges, he characterized the 7.1% vacancy rate as "moderately healthy" compared to pre-pandemic averages.

Future Outlook: Gradual Rebalancing Ahead

The report projects supply will continue outpacing absorption through 2026 before equilibrium returns in 2027. This adjustment period presents opportunities for investors focused on:

- Modern, technology-enabled facilities
- Smaller warehouse spaces
- Markets with constrained new supply
- Custom-built solutions (now 30.4% of deliveries)

As the market evolves, strategic positioning in high-quality assets and adaptive reuse of older properties may define the next phase of industrial real estate growth.

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