Sign up for our newsletters What Will Define Industrial’s Next Stage of Growth?

As the new year unfolds, the U.S. industrial market is entering a new phase of growth. After several years of unbridled development, fundamentals began to normalize in 2025, shaped by uncertainty around tariffs, interest rates and trade policy. At the same time, physical and operational constraints around construction have shifted, prompting developers and operators to place greater emphasis on efficiency, discipline and balance.

Demand remains strong, but the narrative is changing. The question is no longer whether industrial real estate will continue to thrive, but how that growth will be defined—and which owners and operators are best positioned to deliver the next generation of facilities.

Increasingly, success hinges upon the ability to respond to new operational realities, from nearshoring and reshoring manufacturing and building redundancy into supply chains, to accommodating automation- and AI-enabled facilities and supporting infrastructure.

“Where trade policy with major partners like China and Canada ultimately lands remains an open question, and the recent disruptions from trade disputes reinforces the importance of supply chain resiliency, which should prompt occupiers to continue their recent efforts to diversify their supply chains,” Marc Selvitelli, president & CEO of NAIOP, told Commercial Property Executive, pointing to one of the most pressing issues shaping industrial’s next stage of growth, following the speculative sprint of 2022-2024.

Regional nuances

Development patterns in 2025 provide early clues about how the industrial market may evolve in 2026. About 20 percent of new starts last year were build-to-suit facilities—roughly in line with historical averages—according to the latest Emerging Trends in Real Estate report from ULI and PwC. At the same time, construction of large-format assets slowed dramatically: New development of facilities larger than 750,000 square feet fell 85 percent year over year. Taken together, these trends suggest a potential shortage of big-box product heading into 2026.

Against that backdrop, regional advantages are becoming more pronounced. With e-commerce and third-party logistics continuing to drive demand, markets that offer efficient national distribution are positioned to gain an early edge. The Midwest, where travel times allow goods to reach most parts of the country quickly, exemplifies this dynamic, with Chicago posting particularly strong fundamentals. Texas and the Southeast are benefiting from a different but equally powerful mix of drivers, including population growth, manufacturing reshoring and access to major ports such as Savannah, Ga.

While overall new development is expected to remain restrained in the near term, several signals could point toward the next phase of speculative construction—albeit at a more measured pace than in prior cycles. According to Brandon Page, executive vice president and head of leasing at Link Logistics, the return of bulk leasing activity—largely absent from recent national trends—would be a key catalyst.

Early demand metrics suggest momentum is building, even if gradually. In the first half of 2025, net absorption totaled 57 million square feet, noted Stephanie Rodriguez, national director of industrial services at Colliers. By the third quarter alone, absorption reached roughly 60 million square feet, exceeding the total from the prior six months. Rodriguez expects the ramp-up toward the next construction cycle to unfold more slowly than before, with continued reliance on the balance between build-to-suit and speculative development.

Looking ahead, one constraint cuts across markets and regions: infrastructure capacity. Unlocking the next stage of industrial growth in 2026 will hinge not only on tariffs, but also on access to energy, particularly as manufacturing becomes an increasingly important demand driver.

“It used to be that for a 200-to-300,000-square-foot warehouse building, 1,600 amps of power was sufficient. Not anymore,” Rodriguez said.

Power availability becomes central to industrial growth

Power access is emerging as one of the most critical constraints shaping industrial development. Developers are increasingly engaging utility providers early in the planning process to understand how much power a site can realistically support—and, just as important, to demonstrate projected demand before capacity can be delivered. The process increasingly mirrors that of data centers, where lead times for power availability often determine speed to market.

Delays in securing sufficient electrical capacity can now extend up to two years, according to the ULI and PwC report, while upgrades to existing infrastructure frequently take 12 months or more. These timelines are forcing developers and occupiers alike to factor power planning into site selection and project feasibility much earlier than in previous cycles.

The urgency is being amplified by the changing composition of demand. Across the Southeast and Central U.S., manufacturing accounted for 20 percent of new industrial leasing, the same report shows—underscoring the sector’s growing role as a driver of industrial real estate activity.

That shift is also evident in the scale of projects being launched or coming online. Efforts to build greater supply chain resiliency and redundancy have translated into large, power-intensive developments, including Eli Lilly’s $6 billion investment in Alabama, the largest private industrial project in the state’s history, and Hyundai’s $7.6 billion manufacturing facility in Ellabell, Ga.

While manufacturing and reshoring are expected to contribute meaningfully to industrial growth in 2026 and beyond, they also compound existing challenges. These projects carry significant electricity and labor requirements, bringing efficiency, infrastructure readiness and workforce availability back to the forefront of development strategy.

Sustainability considerations are becoming increasingly intertwined with these priorities. Page noted that sustainability is a clear determinant of leasing velocity, with strategies such as rooftop solar installations, energy-efficient building systems and pre-purchasing power capacity expected to play a pivotal role in U.S. industrial markets in 2026 and beyond.

AI and automation proliferate

Efficiency is becoming more multidimensional inside industrial facilities, extending well beyond footprint alone. “Cubic efficiency is a phrase that we hear now more than ever before,” Page added. “I think we’re seeing groups that, historically, have had a little bit more slack in their system, have now made their facilities more functional.”

Oftentimes, more functional implies more automation, a key trend that is likely to gain traction in 2026.

Operators will continue to deploy labor-saving technologies to navigate a persistently tight labor market—a strategy that has gained momentum over the past several years. Automated storage and retrieval systems and cobots, or collaborative robots designed to work alongside humans, are the most common examples among advanced adopters such as Amazon and Walmart. For now, however, these systems are likely to remain concentrated among large-scale operators given the capital investment and operational complexity involved.

AI, by contrast, is gaining broader traction across the industrial real estate lifecycle. Rather than being limited to warehouse operations, AI tools are increasingly being used to improve speed, precision and decision-making well before construction begins. Selvitelli notes that some of the largest time-saving benefits emerge early in the development process, “allowing development teams to more quickly identify sites that meet key criteria, evaluate options for land packaging, model several different design and use options for a new project, and identify when a specific option would likely require a zoning variance.”

AI adoption is also expanding on the occupier side. Large users are deploying increasingly sophisticated algorithms to forecast space needs—sometimes years in advance—while generative AI is beginning to influence marketing and leasing strategies by enhancing campaigns and improving customer targeting.

Supply chain resiliency ties everything together

The final—and most complex—piece shaping industrial real estate’s trajectory in 2026 and beyond is trade policy and geopolitical uncertainty. While industrial development is surging along the Southern border, that growth story is uneven across regions and occupier types, underscoring how sensitive parts of the sector remain to global policy dynamics.

Retailers, wholesalers and manufacturers that depend heavily on raw materials, components or finished goods sourced from countries subject to high tariffs—or ongoing tariff unpredictability—are likely to feel the greatest impact. “Part of the reason why corporate America stayed on the sidelines is there’s just been so much uncertainty, and the time to ramp up supply chain networks takes time,” Page pointed out.