The industrial market is recovering, but regional divergence and rising macro risks mean the rebound will be uneven.
Leasing rebounds to three-year high Q1 2026 leasing hit 226.7 million square feet (msf), the strongest first quarter since Q1 2022 and up 20.8% year over year, as demand for large format spaces strengthens.
Sublease space falls for first time since 2021 Sublease availability dropped to 214.5 msf in Q1 2026, reversing three years of sustained increases and signaling the supply overhang is beginning to clear.
West Coast and Sun Belt diverge sharply Inland Empire vacancy is approaching 10% with West Coast rents down 17.2% from peak, while Dallas and Atlanta continue to see vacancy declines and positive absorption.
E-commerce penetration accelerates E-commerce reached 16.6% of retail sales in Q4 2025, surpassing the pandemic high and reinforcing structural demand for distribution space.
Rising oil prices present headwind for demand WTI crude jumped to more than $100 per barrel in March, reintroducing an energy cost risk that has historically correlated with softer industrial absorption.
