U.S. industrial demand accelerated in the third quarter of 2026, with net absorption reaching 76.6 million square feet and pushing the national vacancy rate down to 6.8%, its lowest level since year-end 2024. The market is entering a new growth cycle driven by shifting structural demand, AI-related activity, and steady consumer demand.
- Net absorption reached 76.6 million square feet in Q3 2026, the strongest quarterly total since Q1 2023, with year-to-date absorption exceeding 203 million square feet.
- National vacancy declined to 6.8%, down 20 basis points from late-2025 peak, with larger facilities seeing vacancy drop 280 basis points year-over-year.
- Inland markets drove 80% of year-to-date absorption, while port markets including Houston, Savannah, and Miami also strengthened significantly.
- Data center and AI infrastructure accounted for over 8% of new leasing activity, emerging as a significant industrial demand driver.
- Newer facilities built after 2020 captured approximately 202 million square feet of year-to-date absorption as occupiers prioritize automation-capable warehouses.
U.S. industrial demand accelerated in the third quarter of 2026, outpacing new supply for the second consecutive quarter and pushing vacancy further below its recent peak, according to new research from Cushman & Wakefield.
Net absorption reached 76.6 million square feet in the third quarter, its strongest quarterly total since the first quarter of 2023. Year-to-date (YTD) absorption surpassed 203 million square feet, marking the market’s strongest nine-month stretch since late 2022.
“Demand has now outpaced new supply for two consecutive quarters, and we’re seeing that translate into lower vacancy, stronger leasing activity and renewed development momentum,” says Jason Price, head of Americas logistics and industrial research at Cushman & Wakefield. “Newer, highly functional facilities continue to capture the majority of demand, although tightening availability is beginning to create some spillover into older product.”
Key takeaways:
· Inland markets accounted for approximately 80% of YTD net absorption, while demand also strengthened across major port markets, including Houston, New Jersey, the Inland Empire, Savannah and Miami. Demand across port markets has already exceeded full-year 2025 levels by 3% YTD.
· Warehouses built after 2020 accounted for approximately 202 million square feet of year-to-date net absorption as major occupiers continued to prioritize facilities capable of supporting automation, efficiency and evolving logistics requirements.
· Data center and AI infrastructure development has also emerged as a significant industrial demand driver. Data center-related users accounted for more than 8% of new leasing activity year to date, as companies that service, supply and distribute equipment, parts and components for AI infrastructure expand in and around major data center markets.
· As newer space tightens, demand has begun to spill into facilities built between 2000-2019. After recording approximately 78 million square feet of occupancy losses during 2024-2025, that segment is showing signs of stabilization in 2026.
· More than one-third of square footage leased year to date has involved transactions of at least 500,000 square feet, and approximately 75% of those large-format deals occurred in buildings developed since 2020.
· New leasing volume surpassed 200 million square feet for the second consecutive quarter, producing the strongest six-month period since the first half of 2022. Over the past four quarters, approximately 810 million square feet of new leases have been completed nationwide, the strongest 12-month total since 2022.
· The national industrial vacancy rate declined to 6.8%, 20 basis points below its late-2025 peak and its lowest level since year-end 2024.
· Improvement has been particularly pronounced among larger facilities, with vacancy in properties of 500,000 square feet or more falling 280 basis points year-over-year to 7.4%. Vacancy in the 300,000- to 500,000-square-foot segment has also declined 50 basis points from a year earlier.
· Approximately 64 million square feet of new industrial space was completed during the third quarter, down 13% from the same period in 2025. Texas markets accounted for approximately 47 million square feet of those deliveries, or one-quarter of the U.S. total.
· Meanwhile, the U.S. construction pipeline increased 6% from the second quarter to approximately 324 million square feet, its highest level since mid-2024 and up 23% year-over-year. Build-to-suit projects represent approximately 35% of the overall pipeline and more than 55% of space underway in facilities of at least 500,000 square feet.
· As vacancy tightens and demand improves, annual asking rent growth reached 4% nationwide. 74% recorded positive year-over-year asking rent growth, up from 70% in the second quarter.
· Looking ahead, the U.S. industrial market appears to be in the early stages of a new growth cycle, supported by shifting structural demand, AI-related activity and steady consumer demand. Vacancy is expected to tighten modestly further by year-end as new supply remains subdued and demand continues to edge higher.
