Industrial Occupier Outlook

The US Industrial Market Wobbles as Demand Normalizes and Supply Rises

Availability rates have been steadily increasing over the past three years, primarily due to a strong construction pipeline. Although the pace of new deliveries is slowing, demand from occupiers is not keeping up with the available supply. As a result, tenants now have more leverage during negotiations. While annual rent growth continues to rise, it is not keeping pace with inflation. Tenants who signed leases five or more years ago are likely to face rent increases, as the significant hikes in 2022 and 2023 have reset lease rates. Net absorption showed a modest rebound in the second half of 2025, following rare negative net absorption figures earlier in the year. Retail spending is expected to remain positive but slow down in 2026, which will lead to a gradual erosion of business inventories over time. Assuming the economy continues to expand, albeit at a reduced pace, vacancy rates are forecasted to increase through 2026.

Industrial Tenant View

• Many occupiers are balancing expansion with economic uncertainty, consolidating into modern, efficient facilities that support supply chains rather than aggressively growing their footprint.
• Some well-positioned occupiers are opting to purchase facilities for long-term cost savings and customization.
• Tenants with more options due to oversupply are increasingly preferring higher-quality, Class industrial properties with modern infrastructure.

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