United States industrial leasing activity saw a strong beginning to 2026, according to the “Q1 2026 U.S. Industrial Market Dynamics Report,” which was recently issued by Chicago-based industrial real estate firm JLL.
One of the primary takeaways of the report highlighted how first-quarter industrial leasing activity saw a 17.8% annual increase, with 145 million square feet (SF) of leases executed—and 71.6% representing new leases. JLL added that asking rates stayed modestly positive, up 0.8% annually to $10.34 per SF, as “landlords balanced competitive pressures with the superior specifications of newer inventory.” It also noted that average direct asking rates for mega-box warehouses rose 14.5% annually, topping all other Class A size segments.
JLL Senior Analyst, Industrial Research Elizabeth Holder told LM that first-quarter leasing strength was driven by a combination of factors, including supply chain diversification, nearshoring manufacturing, and increased demand for modern logistics space in core markets.
“Our data shows that supply chain resilience strategies are accelerating the build-out of redundant inventory networks and safety stock positioning, requiring tenants to secure additional warehouse capacity across multiple geographies rather than relying on centralized distribution models, directly contributing to the 17.8% year-over-year increase in leasing activity,” said Holder. “Additionally, we’ve seen a new wave of industrial-using tenants enter the industrial world. The surge in data center development has created substantial ripple effects throughout the industrial real estate market, as these facilities require extensive supply chain infrastructure to support their operations. Beyond the data centers themselves, companies are leasing significant warehouse and distribution space to house critical components, including servers, cooling systems, backup power equipment, and networking hardware that must be staged, tested, and deployed on accelerated timelines.”
When asked if it was surprising that, despite this strong growth, asking rates were only up 0.8% to $10.34 per square foot, Holder said it was not, as rates remained modestly positive, with landlords balancing competitive pressures with the aforementioned superior specifications of newer inventory.
“In other words, leasing demand improved, but the market still had enough competitive pressure and supply to keep asking rates in check,” explained Holder. “More broadly, the U.S. industrial market is experiencing a period of stabilization, as the recent wave of new deliveries has contributed to a gradual rise in vacancy rates from cyclical lows. This rebalancing between supply and demand is tempering the previously accelerated pace of rental rate growth while creating a more normalized market environment. That said, there are certain size segments (specifically mega-box buildings) with limited inventory that could put upward pressure on rates.”
Looking at big-box leasing, for spaces of at least 500,000 SF, JLL said the first quarter saw an 80.7% annual increase, pointing to renewed confidence in long-term commitments and also reversing the cautious approach that was in place in 2025.
Holder said that demand for new bulk warehouse space has rebounded after a subdued period caused by an uncertain trade and tariff landscape. She also noted that the surge in big-box leasing reflects a strategic consolidation trend, with tenants seeking to house multiple operations under one roof to achieve economies of scale in automation deployment, labor management, and inventory control.
“While we certainly saw a diverse mix of tenants in the big-box leasing space, 3PL tenants are one of the core drivers of this demand,” she said. “This sustained demand has reignited construction activity, with developers responding to limited availability of quality big-box inventory by launching new projects to capture tenant requirements. I do believe that this growth is sustainable. Supply chain volatility is accelerating a fundamental strategy shift: bringing both distribution and production closer to end consumers is now a baseline requirement. The sector is positioned for continued growth, as consumer proximity and supply chain resilience become paramount to competitive advantage.”
Third-party logistics (3PL) service providers’ activity was viewed as the “most notable trend observed in Q1 leasing,” according to JLL, with 3PL leasing activity up 65.2% annually and more than 30 million SF leased in the first quarter.
To that end, Holder observed that the surge in 3PL leasing exceeded expectations.
“It reflects companies’ growing reliance on logistics partners who can navigate supply chain complexity and provide network flexibility during periods of elevated disruption risk, with these providers securing large-format facilities that offer scalability and advanced automation capabilities to efficiently manage volatile demand patterns,” she said.
Looking ahead, Holder explained that this momentum is expected to continue, noting that, given the supply chain shocks experienced over the last five years—from pandemic disruptions to port congestion—3PLs have become essential partners offering the flexibility and expertise that many industrial-using tenants need to navigate volatility.
The first-quarter national vacancy rate came in flat at 7.5%. JLL said that the rate is expected to begin trending downward as existing supply continues to be absorbed and new construction starts remain relatively flat.
A lower vacancy rate does not represent a cause for concern, according to Holder, as it is a sign of market normalization, suggesting a healthier balance between supply and demand.
“In Q1, absorption leasing activity remained resilient at 145.2 million square feet, and net absorption reached 50.9 million square feet, while 50.9 million SF of new deliveries were recorded,” she said. “In this context, a gradual decline in vacancy should be viewed positively, supporting rent stability and a more balanced industrial market rather than raising alarms. While external headwinds warrant careful monitoring and may create short-term volatility in leasing decisions, these structural forces position the sector for continued growth as proximity to consumers and supply chain resilience become paramount to competitive advantage.”
