Industrial Vacancy Rate Declines in Q1

The industrial market is beginning to stabilize after an extended recalibration period, according to Newmark’s 1Q26 U.S. Industrial Market Conditions & Trends report.

New leasing volume rose to 263.4 MSF year to date, up 12.3% from a year earlier, while net absorption reached 53.9 MSF and exceeded 45.3 MSF of deliveries.

That shift helped bring the national vacancy rate down to 7.5%, marking the first quarterly decline since 2022. At the same time, asking rents edged higher, averaging $10.62 per square foot, while the construction pipeline stood at 309.8 MSF and new starts slowed to 53.0 MSF. 

The report also points to a market that is becoming more selective. Large-format space is leading the recovery, newer buildings are absorbing demand more quickly than older stock and capital markets activity is picking up, especially for these newer, larger assets. 

Key Insights 

• Leasing gained momentum:  New leasing volume totaled 263.4 MSF year to date, up 12.3% year-over-year. 
• Absorption moved ahead of supply: Net absorption reached 53.9 MSF, topping 45.3 MSF of deliveries and helping vacancy move lower. 
• Big-box demand is driving the rebound:  Megabox properties of 700,000 SF and larger recorded the strongest leasing gains, and 72% of megabox pipeline space is already preleased or owner-developed. 
• Newer product continues to outperform:  Positive absorption in the quarter was concentrated in buildings delivered since 2020, while older space is taking longer to lease. 
• Rents are moving off cyclical lows:  Average direct asking rent rose to $10.62 per square foot, up 4.2% year over year. 
• Investment activity accelerated:  Industrial sales volume reached $31 billion year to date, up 48% year over year, with owner-users contributing at a higher share than average.