The industrial real estate market just flipped. The era of COVID overbuilding is officially over. New industrial supply fell 24 percent year over year, and construction activity is at decade lows. Net absorption jumped 19 percent in the top 25 markets, meaning demand is outpacing supply for the first time in years.
Modern, well-located warehouses are leasing up fast. Location, infrastructure, and quality matter most. Older stock is sitting empty. Q1 2026 saw 40 million square feet of net absorption, the strongest start in years. National vacancy is around 7.5 percent and stabilizing, though some markets are higher. Austin sits at 21.9 percent, Phoenix at 12.7 percent. But the trend is moving in the right direction. Dallas-Fort Worth, Phoenix, and Indianapolis are leading the recovery. Demand is outpacing supply, which means rents are going to follow. LA is still dealing with COVID-era overbuilding, with West Coast vacancy around 8.3 percent. But inland markets, the Sun Belt, and the Midwest are where the action is. If you're an operator, you're looking at markets where demand outpaces construction, where modern space is scarce, where you can actually charge rent growth. It's specific markets. It's specific product types.
Modern, large-format, automation-ready facilities. That's what tenants want. That's what's leasing. Construction starts are down significantly. Financing is tight. Power and water constraints in some markets. Developers are being disciplined. They're not building unless the rent spread makes sense. We're moving from oversupplied to undersupplied in the right locations. And that's where the money is. For the first time in years, it's a landlord's market. If you own the right asset in the right location, you're in control.
Sponsor: Rise 48 Equity - Vertically integrated multifamily investing.
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