Following years of comparatively reduced construction activity, the industrial pipeline seems poised for a significant expansion in 2026. After record-setting levels of development in 2022, the industrial pipeline went through a period of cooldown, reaching its lowest point in 2024, when starts on industrial projects totaled 306.8 million square feet. That was followed by a more substantial output of 342.1 million square feet in 2025.
For comparison, Yardi Matrix data already shows a total of 274.4 million square feet of industrial projects that have broken ground within the first three quarters of this year. Additionally, estimates suggest that 2026 could feature one of the highest numbers of starts in recent years.
At the same time, current industrial projects face an expanding list of challenges. Chief among these is power availability, as revealed by a survey from the Site Selectors Guild, in which 79% of respondents indicated that power access or constraints on it can essentially determine a project’s feasibility and affect a series of decisions regarding its development.
“In past industrial cycles, power availability was a checkbox item. Now, speed-to-power is the factor that makes or breaks projects in digital infrastructure, advanced and heavy manufacturing, and metals processing.”
Peter Kolaczynski, Director, Yardi Research
In addition, concerns regarding power utilization, traffic flow, air quality, and the loss of open space for other land uses have led to growing opposition from local communities and governments on many planned industrial projects, consequently also lengthening the entitlement process.
Of course, there are plenty of challenges left even after projects manage to break ground. For one, escalating construction and energy costs continue to squeeze development budgets. According to the Bureau of Labor Statistics’ September Producer Price Index, input prices for new non-residential construction rose 11.9% year-over-year (Y-o-Y), while overall non-residential construction costs increased by 5.4%.
At the same time, tariffs have also severely driven up metal expenses: Aluminum is up 25% Y-o-Y, steel has climbed 28%, and copper and brass have surged 30%. Furthermore, diesel prices — which have spiked 70% since the outbreak of the Iran War — heavily affect site work and material transit across the supply chain.
Despite this flurry of hurdles, the industrial outlook for 2026 is largely positive due to continued demand for new warehouses, manufacturing and logistics spaces. Yet, while construction starts are expected to continue their increase for the remainder of the year, some of the headwinds listed above are likely to put a damper on overall supply and ultimately result in growing rent rates.
Rents & Occupancy
Dallas & Miami Lead Nationally for Rent Growth in Last 12 Months
Nationwide industrial in-place rents averaged $9.33 per square foot in September, rising $.02 M-o-M and 5.3% annually. While Atlanta dropped to third place in terms of in-place rent growth, markets across the Sun Belt still lead this list with Dallas boasting the most significant gains during the last 12 months (7.9%), followed by Miami (7.5%).
To that end, Miami maintains its strong trajectory from 2025 into 2026, fueled by Latin American and Caribbean trade through its port; steady domestic migration to Florida from northern states; and high land costs driven by local geographic limits.
Nationally, the industrial vacancy rate hit 9.7% in September, up 40 basis points (bps) over the previous month and 20 bps Y-o-Y. Meanwhile, the premium for new leases dropped to $.80 to bring the average new lease to $10.13 per square foot — narrowing the gap by $.48 in the last year and $1.40 in two years. Despite this national compression, select markets maintain wide spreads, led by Bridgeport, Conn., with a $3.98 premium per square foot and followed by Miami ($2.79) and Dallas at ($2.48).
| National | $9.33 | 5.3% | $10.13 | 9.7% |
|---|---|---|---|---|
| Atlanta | $7.04 | 7.0% | $8.25 | 8.6% |
| Baltimore | $9.90 | 5.4% | $10.27 | 10.6% |
| Bay Area | $15.29 | 4.8% | $16.41 | 9.7% |
| Boston | $12.70 | 5.3% | $14.07 | 13.0% |
| Bridgeport | $10.51 | 4.9% | $14.49 | 7.1% |
| Central Valley | $7.24 | 5.8% | $8.46 | 12.2% |
| Charlotte | $7.87 | 5.4% | $9.82 | 12.4% |
| Chicago | $6.89 | 4.4% | $7.25 | 13.6% |
| Cincinnati | $5.83 | 5.4% | $6.99 | 7.8% |
| Columbus | $5.93 | 2.6% | $6.09 | 5.8% |
| Dallas | $7.27 | 7.9% | $9.75 | 9.8% |
| Denver | $9.74 | 2.2% | $8.72 | 12.8% |
| Detroit | $7.59 | 3.3% | $8.27 | 6.9% |
| Houston | $7.58 | 5.0% | $8.65 | 7.6% |
| Indianapolis | $5.55 | 5.9% | $6.41 | 5.0% |
Supply
Owner-Occupied Projects Make Up Nearly One-Third of Industrial Starts
The national pipeline currently holds roughly 463.3 million square feet of industrial space — a significant expansion on the 357.4 million square feet of space under construction in its stock at the start of the year.
Conversely, 2024 saw the lowest number of industrial projects breaking ground in recent years, but also a significant increase in owner-occupied developments with roughly 30.6% of starts that year falling under that label, according to Yardi Matrix.
As the pace of construction has picked up since then, the percentage of owner-occupied projects held steady, making up 29.7% of starts in 2025 and 27% so far in 2026.
In terms of total square footage, that translates into 103.2 million square feet of owner-occupied project starts in 2025 for the second-highest level across the last 10 years, behind only 2020’s 108.3 million square feet. And, 2026 is primed to be another great year for these types of developments as 76.1 million square feet of owner-occupied projects have already broken ground in the first three quarters of the year.
Industrial Space Under Construction (Million Sq. Ft.)
| Phoenix | $10.47 | $11.41 | 9.9% | 31.38 | $161.63 | $2,792 |
|---|---|---|---|---|---|---|
| Portland | $10.98 | $10.79 | 12.8% | 3.41 | $201.19 | $614 |
| Inland Empire | $12.57 | $13.01 | 9.2% | 12.44 | $177.93 | $2,474 |
| Seattle | $13.37 | $13.37 | 14.0% | 2.90 | $238.51 | $2,483 |
| Bay Area | $15.29 | $16.41 | 9.7% | 3.35 | $303.31 | $2,537 |
| Los Angeles | $15.96 | $16.01 | 8.7% | 3.60 | $269.50 | $3,661 |
| Orange County | $18.28 | $15.98 | 6.6% | 0.38 | $278.94 | $1,358 |
| Central Valley | $7.24 | $8.46 | 12.2% | 8.27 | $105.43 | $547 |
| Denver | $9.74 | $8.72 | 12.8% | 5.66 | $141.96 | $1,260 |
| National | $9.33 | $10.13 | 9.7% | 463.25 | $140.00 | $74,740 |
Bay Area rates in California continued to climb, recording a 60-bps uptick from the previous month and a 160-bps increase year-over-year to currently match the nationwide vacancy average of 9.7%. At the opposite end, vacancies went down 90 bps across California’s Inland Empire month-over-month, whereas in nearby Orange County, rates fell 160 bps Y-o-Y.
Back in the Bay Area, year-to-date industrial sales jumped 40% from the previous month to reach $2.5 billion. Year-over-year, the increase is even more pronounced as the market’s volume grew 269% from a reference point of $687 million last September. Likewise, Inland Empire, Calif., valuations rose 10% M-o-M with average prices per square foot reaching $178. Further north, the average price per square foot of industrial space in Denver went up by nearly 9% in the same period to land at $142.
Midwestern Markets
Indianapolis Pipeline Hits 12.3 Million Square Feet Following 29% M-o-M Increase
Transactions for warehouse and industrial spaces in Chicago since the start of the year totaled $4.4 billion, up 40% from last month and 133% Y-o-Y.
But, Indianapolis sales volume rose even more year-over-year (198%) to total roughly $1.4 billion as of September 2026. Major deals in this market since the start of the year include the sale of the 1.1-million-square-foot Subaru at Park 267 for $137 million, as well as the $137 million deal for a much smaller property (208,906 square feet) in Whitestown, Ind., acquired by LaSalle Investment. In addition, MDH Partners paid $72 million for 70 Connect III, a 1-million-square-foot industrial space in Indianapolis’ eastern suburb of Greenfield, Ind.
Indianapolis industrial construction also rose by 29% throughout September and 122% Y-o-Y with Buildings V & VI of Indianapolis Logistics Park Northwest being a recent addition to its list of projects under construction.
Meanwhile, Cincinnati’s construction activity recorded a significant boost month-over-month with the addition of the 715,736-square-foot Tetris Project and 220,000-square-foot Project Mila – Building 4 to its pipeline, although the output is significantly reduced when viewed on a year-over-year basis (-70%).
Staying in Ohio, rents for industrial spaces in Columbus increased roughly 3% M-o-M to $5.93 with a $.20 premium on new leases. Even so, Cincinnati and Indianapolis currently hold some of the highest premiums for new industrial leases within the Midwest, but they’re still nearly half of what Southern markets such as Miami; Dallas; or Nashville, Tenn., charge for new leases.
In terms of vacancies, Indianapolis and Columbus, Ohio, stood out for year-over-year decreases in their rates, both firmly below the current 9.7% nationwide average. In contrast, vacancy rates for industrial spaces in St. Louis and Kansas City, Mo., rose by 170 and 290 bps Y-o-Y, respectively.
Southern Markets
Miami Premiums for New Leases Approach $3 Per Square Foot — 2nd Highest Nationally
Rents for industrial spaces in Miami reached $14.18 per square foot following a 7.5% increase across a 12-month period — the second highest within the region after Dallas (7.9%). Similarly, leases for Baltimore warehouse and industrial spaces are valued at roughly $9.90 per square foot with new rent agreements commanding a $.40 premium when compared to in-place rents. In fact, with the exception of Tampa, Fla.; Baltimore; and Memphis, Tenn., all other Southern markets have new lease premiums in excess of $1 with rents signed in September in Miami costing nearly $3 more per square foot than leases agreed upon in the last 12 months.
Otherwise, in Atlanta, industrial vacancies have remained fairly stable when compared to the movement visible across other Southern markets: Year-over-year, there’s been only a 20-bps uptick. Atlanta’s 8.6% rate is also the third lowest within the region and below the national average (9.7%).
However, roughly 21.3 million square feet of industrial space in Atlanta is currently under development. In fact, the market boasted a 25% increase in September and a 97% Y-o-Y jump with projects in the pipeline now making up 3.5% of stock. Plus, several 1-million-square-foot projects are in the works, including a logistics facility developed by Hillwood in Jackson, Ga., (Riverview Business Park – Building 300); the I-85 South Crossing in Grantville, Ga.; and Digital Realty’s ATL-15 data center in Forest Park, Ga.
Further south, Tampa, Fla.’s pipeline is relatively modest compared to its Southern counterparts, currently standing at 3 million square feet. Nevertheless, it has witnessed a significant expansion compared to the previous month (29%). Specifically, the 922,800-square-foot Central Florida Integrated Logistics Park – Building 4A and 397,500-square-foot Park 4 at Lakeland – Phase I are among the most substantial additions to this market’s pipeline.
Similarly, year-to-date sales for industrial spaces in Charlotte, N.C., reached $1.86 billion in September, rising 52% M-o-M and 70% Y-o-Y. Not far behind, transaction volume for industrial spaces in Nashville, Tenn., also grew by 35% compared to the previous month, currently totaling $850 million, with a price per square foot of around $136.
Northeastern Markets
Bridgeport, Conn., Vacancies Reach 7.1% in September After 100-bps M-o-M Uptick
Bridgeport, Conn., industrial vacancy rates reached 7.1% in September, recording a 160-bps growth year-over-year. Along with New Jersey, vacancies for Bridgeport, Conn., industrial spaces remain below the nationwide average.
In this region, Philadelphia was the only Northeastern market that continued to add projects to its pipeline last month, expanding it by roughly 17%. In particular, pProjects such as the 717,602-square –foot DataOne – Buildings 1 & 2 recently broke ground in Vineland, N.J., and are part of a pipeline that now totals 9.2 million square feet and has grown 75% Y-o-Yyear-over-year.
Also in Philadelphia, valuations for industrial year-to-date sales rose by 17% M-o-M to $166 per square foot. Total transaction volume also jumped 43% in September to reach $2.16 billion and record an impressive 154% Y-o-Y increase. Notable deals closed since the start of 2026 include the sale of a 518,140-square-foot property in Berks County acquired by U.S. General Services Administration for $87.4 million, as well as the $87 million sale of the 345,500-square-foot Navy Yard at 4300 S. 26th St.
Likewise, rents for industrial spaces in New Jersey rose nearly 7% across a 12-month period, settling at $13.04 per square foot in September. In this case, premiums are roughly double the national average with new leases $1.50 costlier per square foot than in-place rents. However, Bridgeport, Conn., premiums are the highest across all major U.S. markets, charging $4 more per square foot for new agreements compared to leases signed in the last 12 months.
Economic Indicators
Warehouse Employment Continues to Fall Despite Logistics Sector Growth as Operators Embraces Automation
Warehouse employment has maintained its steady downward trend, according to recent Bureau of Labor Statistics data. As of September, the warehousing and storage sector employed 1.83 million workers — virtually unchanged from the beginning of the year after modest early gains were erased during the summer. Year-over-year, employment in the sector fell 1.2%, leaving it 5.5% below its peak in March 2022.
This ongoing drop in staffing amid sustained, e-commerce-driven demand for logistics real estate underscores a growing separation between physical space needs and headcount growth. Since the post-pandemic e-commerce surge, logistics operators have prioritized automation and efficiency. And, as market demand increasingly favors modern, automation-ready facilities, labor requirements across warehouses are expected to decline even further.
Methodology
The monthly CommercialCafe national industrial real estate report considers data recorded throughout the course of 12 months and tracks top U.S. industrial markets with a focus on average rents; vacancies (including subleases, but excluding owner-occupied properties); deals closed; pipeline yield; forecasts; and the economic indicators most relevant to the performance of the industrial sector. Listing rate and occupancy information was based on Yardi Research data.
- Average Rents: Provided by Yardi Market Expert, a cutting-edge service that uses anonymized and aggregated data from other Yardi platforms to provide the most accurate rental and expense information available.
- Vacancy: The total square feet vacant in a market, including subleases, divided by the total square feet of industrial space in that market. Owner-occupied buildings are not included in vacancy calculations.
Stages of the supply pipeline:
- Planned: Buildings that are currently in the process of acquiring zoning approval and permits, but have not yet begun construction.
- Under Construction: Buildings for which construction and excavation have begun.
Sales volume and price-per-square-foot calculations for portfolio transactions or those with unpublished dollar values are estimated using sales comps based on similar sales in the market and submarket; use type; location and asset ratings; sale date; and property size.
Year-to-date metrics and data include the time period between January 1 of the current year through the month prior to publishing the report.
Market boundaries in the CommercialCafe industrial report coincide with those defined by the CommercialCafe Markets Map and may differ from regional boundaries defined by other sources.
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All Images Courtesy of: Yardi Research
