Article Summary
The U.S. industrial market strengthened in Q2 2026 with vacancy falling to 6.9% as occupier demand and disciplined development created balanced market conditions, while leasing activity reached its highest level since mid-2022 with 62.1 million square feet of net absorption.
- National industrial vacancy declined to 6.9% in Q2 2026, down from above 7% in prior quarters
- Net absorption totaled 62.1 million square feet in Q2, with year-to-date absorption reaching 113.6 msf, the strongest first-half performance since 2023
- Leasing activity hit 193.4 million square feet in Q2, the highest quarterly total since mid-2022, up 16% year-over-year
- Modern industrial properties completed since 2020 accounted for 137 msf of net absorption in the first half, with large-format facilities (500,000+ sf) representing nearly half
- Dallas/Fort Worth led market activity with 40.3 msf of leasing, followed by Inland Empire (28.5 msf) and Chicago (21.8 msf)
The U.S. industrial market continued to strengthen in the second quarter of 2026 as demand and supply were in balance, pushing the national vacancy rate below 7% while leasing activity reached its highest level since mid-2022, according to Cushman & Wakefield's latest report.
"After several quarters of market recalibration, the U.S. industrial sector is entering a new phase characterized by healthier fundamentals and more balanced growth," says Jason Tolliver, president, logistics and industrial Americas at Cushman & Wakefield. "Occupier demand continues to build while development has become much more disciplined than it was during the peak construction cycle. That combination is beginning to tighten market conditions once again, particularly for newer, high-quality logistics facilities."
Key takeaways:
· Net absorption totaled 62.1 million square feet (msf) during the quarter, marking the second time in the past three quarters that quarterly demand exceeded 60 msf. Year-to-date, occupiers have absorbed 113.6 msf of industrial space, the strongest first-half performance since 2023. Over the past four quarters, net absorption reached 236 msf, more than 17% above the post-pandemic three-year average.
· At the same time, industrial vacancy declined to 6.9% as new deliveries remained relatively modest. Developers completed 62 msf of new space during the second quarter, bringing first-half deliveries to 119 msf, nearly 20% below the same period last year.
· Demand continued to concentrate in modern industrial properties as occupiers prioritized higher clear heights, greater operational efficiency and increased power capacity to support automation. Warehouses completed since 2020 accounted for 137 msf of net absorption during the first half of the year, with facilities larger than 500,000 sf representing nearly half of that total.
· Leasing activity remained resilient despite longer decision-making timelines. New leasing volume reached 193.4 msf during the second quarter, the highest quarterly total since mid-2022. Year-to-date leasing activity is up 16% from a year ago and stands at its highest level in four years, supported by continued demand for large-format distribution facilities.
· Nine markets have each recorded more than 10 msf of leasing activity so far this year, led by Dallas/Fort Worth with 40.3 million square feet, followed by the Inland Empire with 28.5 msf and Chicago with 21.8 msf.
· Although construction activity continued to recover modestly, the development pipeline remains well below the historic highs reached during the post-pandemic expansion. Approximately 305 msf of industrial product is currently under construction, representing the fourth consecutive quarterly increase and an 18% year-over-year gain.
