By Brandon Glick, Managing Partner, Chicago
If you lease warehouse or distribution space, this is still a good time to be at the table. National asking rents are flat quarter over quarter, free rent is back, and space is taking longer to lease than it has in years.
But the conditions that created this window are fading. New construction has fallen off a cliff, demand has nearly caught up with supply, and the forecast points to tighter conditions by 2028.
If you have lease expirations in the next two to three years, the question isn’t whether you have leverage. It’s how long you have to use it. Here’s what the data says and what I’m telling clients right now.
The national numbers
National industrial vacancy sits at 7.3%, after more than three years of steady increases. Availability, which includes space under construction, is higher at 9.4%, and sublease availability has crept up to 0.9%.
Rent growth has stalled. Asking rents are up just 1.3% year over year, the slowest pace since 2012, and flat over the most recent quarter. For context, annual rent growth peaked near 10% in late 2022.
Space is also sitting longer. The typical lease now takes more than five months to sign from the day space hits the market, versus about three and a half months only a few years ago.
Here’s the part that matters most: demand is catching up. Over the last 12 months, the market absorbed 222 million square feet against 265 million delivered. In 2025, supply outran absorption by more than two to one. So far in 2026, the two are nearly even.
Building size matters more than ever
The national average hides three very different markets.
The 100,000 to 500,000 square foot range is where tenants have the most room. Most of the speculative construction of the last few years landed here, growing that stock by more than 14% since 2021. Vacancy in those buildings now tops 10%, the highest in over a decade, and asking rents for spaces over 50,000 square feet are down roughly 2.7% from a year ago.
Buildings over 500,000 square feet are a different story. Owner-user purchases and build-to-suit deliveries pulled a lot of that product off the market over the past year, and vacancy in that segment has contracted. Walmart alone bought at least six large facilities across five states since August 2025, and Dollar Tree picked up a 1.25 million square foot building in Arizona.
Small-bay never loosened. Buildings under 50,000 square feet are still below 5% vacancy, close to pre-pandemic levels, and those spaces lease in under five months versus more than eight for anything over 100,000 square feet. Tampa, Charlotte, Nashville, Jacksonville and Orlando have some of the tightest small-bay conditions in the country.
The takeaway: a 300,000 square foot requirement and a 900,000 square foot requirement in the same market can call for completely different negotiating postures.
Where it’s moving, region by region
Dallas-Fort Worth is the demand engine. It led the country with 44 million square feet of net absorption over the past year, nearly double the next market. Phoenix (22.7 million) and Houston (21.5 million) follow, though Phoenix vacancy is still above 10% after its building boom.
The Midwest is the quiet winner. Chicago absorbed more than 16 million square feet with vacancy at just 5.1% and asking rents up 4.4%. Cincinnati sits at 3.9% vacancy with 5.9% rent growth, and Columbus and Indianapolis both posted more than 10 million square feet of absorption. These markets never got the wild swings of the Sun Belt, and landlords there have less reason to bend.
Some Sun Belt and Midwest markets are still digesting a supply wave that could take more than two years to clear. Austin is the extreme case at 14.1% vacancy with rents down 0.8%. Greenville/Spartanburg, San Antonio and parts of Indianapolis carry the same risk, especially for 100,000 to 500,000 square foot logistics buildings.
The coasts and border are still correcting. Los Angeles rents are down 3.9% year over year, the Inland Empire is off 0.9% with 8.9% vacancy, and Seattle sits at 10.4% with negative absorption. Along the U.S.-Mexico border, availability in Laredo, Eagle Pass and El Paso now exceeds 15%.
For a national network, those spreads matter more than any headline number. The same company can be negotiating from strength in Austin and racing the clock in Cincinnati in the same quarter.
The supply wave is ending
This is why the window is closing. Net new supply peaked at around 150 million square feet in a single quarter at the end of 2023. By the second quarter of 2026, it had fallen to 46 million, an 8-year low.
Starts tell the same story. Groundbreakings hit 10-year lows in late 2024 and stayed muted through 2025. With large projects taking roughly 14 months to build, that slowdown is now showing up as fewer new buildings coming online.
The forecast follows the math. Vacancy is expected to hover around 7.5% through 2027 and then drift lower, while annual rent growth climbs from 1.3% today to roughly 2.6% in 2027 and 3.4% in 2028.
There are real risks to that outlook. Trade policy is still shifting, Middle East disruptions are pushing up energy and shipping costs, and the Fed raised rates again in September. A mild recession could push vacancy into the 8% to 9% range. But absent a downturn, the leverage tenants enjoy today gets thinner every quarter.
What occupiers should do now
Ask for the concessions. Free rent has come back in a real way. Three months free on a five- to seven-year deal is increasingly attainable, and one logistics company landed five months free on a five-year lease for 250,000 square feet of new space in the Inland Empire. Two years ago, that conversation didn’t happen.
Pull 2027 and 2028 expirations forward. A distributor with a 400,000 square foot lease rolling in late 2027 is better off negotiating in 2026, while rents are flat and landlords are fighting for occupancy, than in 2027 when the pipeline is thinner. Early renewals and blend-and-extend deals are worth modeling now.
Lock in term at today’s pricing. If rent growth roughly triples between now and 2028, a longer lease signed at flat rents with fixed escalations is a real hedge. Pair it with expansion rights or a termination option so you aren’t trading flexibility for price.
Don’t assume renewal means a discount. Rents rose dramatically between 2021 and 2023, so a tenant still paying a 2019 rate will likely see an increase at renewal even in a soft market. The goal is to capture TI, free rent and better terms in exchange.
Treat the portfolio as one negotiation. If you have buildings in Austin, Chicago and Los Angeles, you’re dealing with three different markets at once. A market-by-market approach leaves leverage on the table. A centralized strategy lets you push hard where tenants hold the cards and move quickly where they don’t.
The bottom line
The industrial market isn’t in trouble. It’s rebalancing after the biggest building boom in its history, and for now that favors tenants.
But supply is drying up, demand is holding, and the math points to tighter conditions within the next 18 to 24 months. The occupiers who come out ahead will be the ones who use today’s leverage on tomorrow’s expirations.
If you’re looking at lease events over the next few years and want a second set of eyes on timing or strategy, I’m always happy to compare notes.
