Is the Industrial Real Estate Market Tightening? What Industry Leaders Are Watching

By Sam Laird

The industrial real estate market has been through a full cycle in the span of five years: record-breaking demand during Covid, a surplus of new supply that followed and a correction that's now quietly flipping back in favor of warehouse property owners. Glenn Wylie, executive vice president and head of Asset Management at Link Logistics, recently joined FreightWaves’ “Industrial Market Pulse” to explain what's happening across the market right now, which sectors are driving demand for warehouse space and how industrial real estate is being reshaped by AI, advanced manufacturing and the continued acceleration of e-commerce. Here are some highlights from the conversation. 

What Is the Current State of the Industrial Real Estate Market?

After years of oversupply relative to the post-Covid demand peak, the industrial real estate market has rebalanced. December 2025 was one of Link Logistics’ highest-leasing-volume months since 2021, and that momentum has carried into 2026. Demand from customers across the firm's national portfolio remains high.

A few structural indicators tell the fuller story: National availability has been declining since Q3 2025—the first sustained drop since 2021—while the construction pipeline is down 35% with new starts at a 10-year low, Wylie said. Infill development has become increasingly difficult to execute. Together, those conditions are tightening the market in ways that should persist.

"If demand continues to play through like this with the current construction pipeline, I think we'll continue to see ourselves in a favorable position from an availability standpoint," Wylie said.

How Are Tariffs and Trade Uncertainty Affecting Industrial Leasing Decisions?

During the initial tariff announcements in 2025, Wylie noted, there was a near-halt in leasing decision-making as businesses waited to assess the impact. That dynamic has shifted. Today, most customers are moving forward with leasing decisions despite ongoing uncertainty—what Wylie described as "playing through" the uncertainty rather than pausing because of it.

What Is Driving Demand for Warehouse and Industrial Space Right Now?

Three primary demand drivers are shaping the industrial real estate market:

E-commerce and last-mile delivery expectations: Consumer expectations have been fundamentally reset. Roughly 75% of shoppers now expect two-day delivery, Wylie said, and younger generations have grown up treating that as a baseline. As e-commerce sales grow, so does the need for warehouse space—Wylie said Link Logistics estimates that every $1 billion in e-commerce sales generates approximately 1.2 million square feet of additional industrial demand.

Data center spillover: AI infrastructure build-out is creating an indirect but significant source of industrial demand. Companies constructing data centers need nearby warehouse space for the duration of multi-year projects. A second, stickier user group—the companies that maintain racks, servers, and parts—typically locates within close proximity to those facilities on a permanent basis. In Phoenix, where TSMC has committed billions to a North Phoenix semiconductor campus, Wylie said 36 chip companies have relocated to the greater metro since 2021. Link Logistics research indicates approximately 2 million square feet of spillover demand per gigawatt of data center construction.

Advanced manufacturing: Robotics, semiconductor fabrication, and defense and aerospace companies are driving industrial demand in markets including the Bay Area, Orlando, Southern California, and the Midwest. Wylie described this as traditional industrial being pushed into "higher and better uses."

What Does Warehouse Availability Look Like Nationally—and Do National Averages Mislead?

The national availability rate sits at roughly 8–9%, Wylie said, but that aggregate number masks important divergence between product types.

Small bay infill warehouse properties—typically multi-tenant buildings under 100,000 square feet, often in supply-constrained urban or near-urban locations—are running at around 5.5–6% availability nationally, Wylie said. These assets are the hardest to develop due to land scarcity and entitlement challenges, which has limited new supply and kept vacancy consistently below the national average. They also serve a distinct customer base: local businesses alongside national accounts that need proximity to end consumers as delivery time windows continue to compress.

Bulk distribution—buildings of 500,000 square feet or more—was oversupplied through mid-2025 but has since seen a sharp reversal, Wylie said. In Charlotte, five large-format buildings were available at the end of 2025; within 90 days, four had been either leased or purchased. Similar patterns have played out in Atlanta, parts of the Midwest and Texas. With construction starts now at decade lows, Wylie said that oversupply correction is unlikely to reverse quickly.

What Are Industrial Tenants Looking for When Evaluating Warehouse Space?

The fundamentals remain constant—clear heights, proper loading configurations, and overall building functionality. Labor access and location continue to be table-stakes requirements.

What has changed is the weight tenants now place on power capacity. AI, automation, and robotics are driving customers to evaluate buildings not just for what they can do today, but for what their operations will require in three to five years. The questions Wylie hears most often: Can the building support automation? Will it accommodate EV charging? Can it handle a future production line addition?

Power capacity, in other words, has become as important a specification as dock doors or clear height—and buildings that can credibly answer those questions about the future are commanding more attention in the leasing process.

Glenn Wylie is executive vice president and head of Asset Management at Link Logistics, a leading owner and operator of last-mile industrial real estate across North America.