What’s Driving Industrial Real Estate Demand in 2026?
This article is based on a conversation between Link Logistics CEO Luke Petherbridge and CBRE's Spencer Levy and John Morris on CBRE's “The Weekly Take” podcast.
Despite a year of trade policy uncertainty, geopolitical volatility and shifting market dynamics, U.S. industrial real estate delivered its second-best leasing year on record in 2025. According to CBRE, the sector logged approximately 940 million square feet of leasing activity—up 12% from 2024. Only the COVID-driven peak of 2021 surpassed it.
"The resilience of this sector is quite remarkable," Link Logistics CEO Luke Petherbridge said on the podcast.
So what's behind the strength? And what comes next? Here's a look at the forces shaping industrial real estate demand today, as well as the innovations poised to reshape the warehouse market tomorrow.
Why Is Industrial Real Estate Demand Strong?
Demand for industrial real estate has proven resilient due to three structural tailwinds that are driving demand for warehouse and logistics space across U.S. markets.
1. E-commerce keeps accelerating
E-commerce continues to reset consumer expectations in ways that require more warehouse space, not less. Same-day and next-day delivery has become the baseline for a generation of consumers who grew up with Amazon Prime as a given. As e-commerce penetration continues rising, the volume of goods moving through logistics networks grows with it—and so does the need for last-mile distribution space close to population centers.
Reverse logistics is an emerging piece of this story, too. Online purchases are returned at significantly higher rates than in-store purchases, and the infrastructure to handle those returns efficiently is still catching up to the scale of the problem.
2. The reindustrialization of America
Petherbridge noted that more than $800 billion in manufacturing announcements have been made across the U.S. in recent years, and said the ripple effects on industrial real estate are significant. Manufacturing-based leasing—space for sub-assembly, parts storage and components servicing—was up 35% to 45% in some regions in 2025, according to CBRE. It's the first time manufacturing has represented more than single digits as a share of overall leasing.
Data center construction is adding another layer of demand. Every major data center build creates supply chain needs—electrical components, cooling equipment, maintenance parts—that require industrial space.
3. New supply is near a decade low
New industrial starts are at their lowest levels in nearly 10 years, Petherbridge noted. Several factors are converging to keep supply tight: municipalities often prioritize housing and retail over industrial real estate development; land in high-demand markets is increasingly competing with data centers and residential use; and construction costs have made large-spec builds less economically attractive. In some markets and size categories, CBRE is already reporting that available supply has effectively run out.
That scarcity, combined with diversified new demand drivers, creates a favorable backdrop across building types from small bay to mid bay to bulk distribution.
What Do Tenants Actually Look for in a Warehouse?
The answer depends more on the tenant than the building spec, Petherbridge explained.
High-throughput users—3PLs, large e-commerce operators, companies managing significant safety stock—need modern bulk space: 36-foot clear heights, robust trailer parking, adequate power infrastructure and cross-dock configuration. Automation in this category will only continue to proliferate.
But a large share of industrial tenants have entirely different priorities. For local service businesses—HVAC contractors, window installers, light manufacturers—clear height is less relevant. What matters more is proximity to employees, job sites and customers.
The common denominator across tenant types is location. Transportation accounts for roughly 55% to 70% of total logistics costs, Petherbridge noted, while rent is typically around 5%. When the cost of moving goods dwarfs the cost of occupying space, being in the right place matters far more than being in the newest building.
How Will Autonomous Trucks Change Industrial Real Estate?
Driverless trucks are already operating commercially, with 18-wheelers currently running routes between Houston and Dallas. The long-term implications for industrial real estate networks could be significant.
Driver pay represents roughly one-third of total trucking costs. If autonomous vehicles reduce transportation costs materially, the economics of supply chain geography shift. Warehouses don't need to be as close to population centers if goods can move faster and cheaper over longer distances. Distribution networks that were designed around driver hours-of-service rules may need to be reconsidered.
"If drivers could drive 24 hours a day because it's autonomous, that fundamentally changes how networks lay themselves out," Petherbridge said. The question for industrial real estate, he argued, isn't just about individual buildings—it's about where networks should be positioned as transportation economics evolve.
Frequently Asked Questions About Industrial Real Estate
What is driving demand for industrial real estate in 2026? The three primary drivers are e-commerce growth and the speed expectations it creates, the reindustrialization of the U.S. economy through factory investment and supply chain reshoring, and constrained new supply driven by low construction starts and competition for land.
Why is industrial real estate supply so limited? New construction starts are near decade lows. Municipalities frequently prioritize housing or retail development over industrial. In high-demand infill locations, land is increasingly being acquired for data centers or residential use, limiting what's available for warehouse development.
What is last-mile industrial real estate? Last-mile industrial real estate refers to warehouse and distribution facilities located close to end consumers, enabling fast delivery. These properties are typically smaller-bay buildings in dense, infill locations. Proximity to population centers and labor is often more important than building specs like clear height.
How does e-commerce affect warehouse demand? E-commerce requires more warehouse space than traditional retail because inventory must be staged closer to the end customer to enable fast delivery. Higher return rates also create demand for reverse logistics infrastructure. As e-commerce penetration grows, so does the need for last-mile and regional distribution space.
Will autonomous trucks change where warehouses are located? Potentially, yes. If driverless trucks reduce transportation costs significantly, the calculus around warehouse proximity to population centers could shift. Distribution networks may be able to operate efficiently from locations farther from urban cores, which would affect industrial site selection over time.
What is reindustrialization and how does it affect industrial real estate? Reindustrialization refers to the return of manufacturing activity to the U.S., driven by policy incentives, supply chain resilience initiatives and major factory investments. This creates demand for leased space supporting sub-assembly operations, parts storage and supply chain logistics—all of which occupy industrial real estate.
