Demand for U.S. industrial space continued to recover in the second quarter, though tenant expansion remained well off pre-pandemic average growth. U.S. net absorption came in at 44.4 million SF for the quarter, bringing the mid-year total to 77.1 million SF — roughly 30% below the pre-pandemic five-year average.
First-half deliveries fell to 93 million SF, including just 44.4 million SF in Q1 — the lowest quarterly total in seven years. Supply additions have moderated, but three years of pulled-back tenant demand have left a supply overhang in many trade-dependent markets. Deliveries peaked in late 2023 at nearly 291 million SF in a single half-year period, and several Sun Belt and Midwest markets with fewer development constraints — Austin, Indianapolis, Greenville/Spartanburg, Phoenix, and San Antonio among them — remain part of a record supply wave that could take more than two years to fully absorb.The strongest net absorption over the past 12 months came from Dallas-Ft. Worth (28.7 million SF), Phoenix (23.5 million SF), Houston (18.3 million SF), Indianapolis (15.5 million SF), and Columbus (12.7 million SF).
The overall U.S. vacancy rate ticked up slightly to 7.5% in the second quarter. Vacancy averaged more than 9% for large logistics buildings and less than 5% for smaller buildings under 50,000 SF without dock-high loading — a gap driven partly by acute shortages of small-bay space in markets like Tampa, Charlotte, Nashville, Jacksonville, and Orlando.The tightest major markets at quarter's end were Cleveland (4.4%), Detroit (4.9%), Chicago (5.4%), Pittsburgh and St. Louis (5.5%), Columbus (6.4%), and Los Angeles and Orange County, tied at 6.5%. The loosest markets included Austin (14.3%), San Francisco (12.5%), Phoenix (10.5%), Seattle (10.1%), and Charlotte (9.8%). With vacancy elevated and leasing slower, year-over-year rent growth slowed to 1.3% nationally — its lowest rate since 2012.
A few national data points are worth flagging for owners and tenants in our market:
These national rankings reinforce what we're seeing on the ground locally: Southern California's industrial fundamentals remain among the strongest in the country, even as the broader national market works through a slower-than-average recovery.If you're weighing a sale, evaluating a refinance, or want a clearer sense of where your property stands against this backdrop, a Complimentary Valuation is a good starting point — a market estimate built on current data, not a substitute for a lender's formal appraisal.Data source: Lee & Associates Research, Q2 2026 Industrial Market Report.We specialize in industrial real estate from the greater Los Angeles to the Inland Empire markets, including: Long Beach, Carson, Torrance, Gardena, Compton, Rancho Dominguez, Wilmington, Paramount, Santa Fe Springs, Huntington Beach, Garden Grove, Irwindale, Signal Hill, Pomona, City of Industry, and Ontario, serving surrounding submarkets including LA South Bay, LA Central, Mid-Counties, San Gabriel Valley, Orange County and the Inland Empire.
Q: How does the national industrial market compare to pre-pandemic norms?
A: U.S. net absorption is running about 30% below the pre-pandemic five-year average, reflecting a slower, more uneven recovery from trade-related demand disruptions.
Q: Which markets have the tightest industrial vacancy nationally?
A: Cleveland, Detroit, Chicago, Pittsburgh, and St. Louis lead the country in the second quarter of 2026, with Los Angeles and Orange County close behind at 6.5% — well under the 7.5% national average.
Q: Are industrial rents still growing nationally?
A: Yes, but growth has slowed to 1.3% year-over-year, the lowest rate since 2012, as elevated vacancy in supply-heavy markets weighs on the national average.
Q: How does Southern California compare to the rest of the country on pricing?
A: Los Angeles and Orange County rank among the highest average industrial sale prices per square foot nationally, and the Inland Empire has one of the lowest average cap rates in the country — both signs of sustained investor demand for well-located Southern California industrial assets.
Q: How can I get a valuation on my industrial property?
A: Contact Ron Mgrublian directly for a Complimentary Valuation — a data-driven, no-cost estimate of your property's current market value.
Ron Mgrublian
Principal, Lee & Associates Los Angeles – Long Beach
CalDRE# 01902882
