Industrial user demand and new supply are increasingly aligning despite broader economic uncertainty, though different parts of the market are moving at varying speeds, according to Colliers’ 2026 CRE Outlook.Space under construction has fallen 63% since peaking at 711 million square feet in 2022, dropping to 270 million square feet — the lowest level since 2018. This figure is expected to bottom out near 260 million square feet in 2026, with starts remaining below historical averages, setting the stage for a new wave of development fueled by pent-up demand and strong fundamentals. Build-to-suit projects are on the rise, but speculative construction is expected to remain measured until vacancy recovers and the gap between replacement-cost rents and market rents narrows, said the report.
Third-party logistics, trucking and transportation firms are expected to account for about one-third of new bulk occupancies next year, led by Asia-based 3PLs continuing to gain market share. Manufacturing is projected to expand, supported by reshoring initiatives and the CHIPS Act, which have pushed construction spending roughly 200% higher since 2020. Growth in this sector may level off in 2026.
Data center construction spending is also expected to continue rapidly increasing, following a 400% rise since 2022. Demand is projected to grow 10% – 12% annually but faces mounting challenges from power, land, cooling, and connectivity constraints, with limited grid capacity a top obstacle in many major markets. The technology and research & development sectors are also expanding, while e-commerce is expected to remain subdued, representing less than 3% of new bulk occupancies after its 2025 decline.
Net absorption, which was sluggish through early 2025, surged during the third quarter to its highest level since early 2023. Demand is spread across all building sizes, and net absorption is expected to exceed 200 million square feet next year, up 37% from 2025 projections. Industrial users are showing renewed confidence in leasing activity, said the report.
Vacancy could near its peak at 7.6% in 2026 after rising for three years. Vacancy fell over the past year in 14 markets, including six in the Midwest and five in the South. Even in markets where vacancy remains above 10%, the pace of increase has slowed, said Colliers.
Rent growth has slowed sharply from the double-digit gains of 2021–2023. Warehouse and distribution rents rose only 2% over the past year and have retreated in some markets. In 2026, rent growth is expected to remain modest at 1% – 4%, with oversupplied markets likely to see slower gains.
Global supply chains are evolving under pressure from geopolitical, labor, technological, sustainability, and operational factors. Companies are diversifying sourcing and relocating production closer to end markets. Mexico has surpassed China in imports to the U.S., while Latin America and lower-cost Asian nations are emerging as key manufacturing hubs, the report said.
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