After a period of post-pandemic high vacancy rates in the industrial sector, activity is poised to rebound this year as occupiers drive a flight to quality to enable automation, commercial real estate specialists say.
“We started seeing a lot of vacancies [in the market] over the past two years,” David Weissman, managing partner at Greek Real Estate Partners, said in an interview. “Lots of capital stayed on the sidelines waiting for the right opportunities [and] tariffs didn’t help the situation.”
But that has begun to turn around, he said, with “vacancy being absorbed into the market toward the end of last year, into this year, [which] seems a bit more promising. We’ve definitely seen some uptick” in deal activity.”
Weissman’s company manages about 23 million square feet across 135 buildings in the industrial space.
Companies reshoring their manufacturing operations and outsourcing distribution to third-party logistics, or 3PL, companies are driving improved leasing volume, according to CBRE’s 2026 U.S. real estate market outlook. Some of those moves will come at the expense of older assets because of occupiers’ flight to quality.
“A lot of the traditional operators in the U.S. were … sitting on the sidelines, [with] uncertainty about tariffs and so forth, and no one was ready to move forward and invest in a new site as much,” Weissman said. “But now you’re seeing some more U.S.-based companies coming back into the market and looking for space and expanding.”
CBRE says it expects tenants to renew industrial space at record levels. Renewals are set to account for more than 35% of total volume, compared with the historical average of 24%.
Occupiers and 3PL companies need first-generation space for leveraging AI to improve their services. In the consumer space, “mega big-box occupiers” are upgrading their space and focusing on locations that help create a resilient supply chain from a labor, cost and power availability standpoint, CBRE says.
“We see that a lot of the larger corporations have [such] optimistic views of volume and sales and consumer trends that they’re looking to expand their operations and make sure they’re properly supporting their network or distribution,” Weissman said.
Lease expirations for first-generation blocks of 500,000 square feet or more are also expected to accelerate over the next three years, increasing the potential tenant base, according to the report. The push is expected to drive down the current large supply of first-generation facilities quickly, according to the CBRE report
3PLs will account for more than 35% of industrial leasing activity this year, CBRE says. As occupiers use AI and diversify supply sourcing, including from domestic manufacturers, the availability of labor and power will drive demand in the Midwest, mid-Atlantic and Southeast regions, the report says.
“A lot of our tenants are using automation as part of their operating procedures to be more efficient,” Weissman said. “They’ve got to stay on top of their equipment. They’re trying to be more efficient. That’s been a huge driver for them, less people but better equipment.”
Build-to-suit development will increase to meet more specialized occupier requirements, CBRE says. Speculative development, by contrast, should be minimal in 2026 due to the current oversupply of vacant first-generation space and difficulty obtaining construction financing.