Every cycle has a moment when the narrative lags reality. For industrial real estate, that moment is now. The headlines still talk about “rising vacancy” and “oversupply.” The data tells a completely different story — one of a market that has already turned.

I’ve spent the last several weeks studying Q4 2025 reports from CBRE, Cushman & Wakefield, Prologis, and First Industrial. What emerges isn’t ambiguous. It’s a textbook setup: demand accelerating into a supply vacuum. Let me walk you through what I’m seeing and why I think the next 12–18 months represent one of the best entry points for industrial real estate since 2020.

Demand isn’t just recovering — it’s accelerating.

Let’s start with the most important signal: tenants are leasing space at a pace that even the optimists didn’t predict six months ago. In Q4 2025, the U.S. industrial market recorded 54.5 million square feet of net absorption, a 29% jump compared to the same quarter in 2024. That wasn’t a one-quarter blip. Full-year 2025 absorption hit 176.8 million square feet, up 16.3% over a 2024 that itself wasn’t weak.

But the leasing numbers are what really caught my attention. CBRE reported Q4 leasing volume of 226 million square feet — a new all-time record, up 22% year-over-year. For the full year, leasing hit 941 million square feet, the second-highest figure ever recorded, trailing only the pandemic-fueled frenzy of 2021. These aren’t small companies kicking tires. Cushman & Wakefield tracked 43 leases exceeding one million square feet in 2025, a 30% increase from 2024. The big users — the 3PLs, the e-commerce operators, the manufacturers reshoring production — they’re committing to long-term space in size.

The big-box segment tells an even sharper story. Cushman & Wakefield tracked 146 leases for warehouses over 500,000 square feet signed in 2025 — up 31% year-over-year and the highest total since 2022.

What’s driving this acceleration? It’s not just one sector. Third-party logistics providers are taking big new buildings to accommodate demand from retailers outsourcing fulfillment operations. But perhaps the most interesting emerging driver is the data-center supply chain. The massive data-center build-out happening across the country is generating increased demand from companies supplying electrical systems, power racks, and hardware — a structural tailwind that barely existed two years ago, and one the market hasn’t fully priced in.

Geographically, the strength is broad-based. DFW led the nation with 31 million square feet of absorption in 2025, but Indianapolis, Kansas City, and Greenville-Spartanburg all posted numbers meaningfully stronger than 2024. This isn’t a coastal story or a Sun Belt story. It’s a national story driven by structural demand — nearshoring, inventory resilience strategies, and the continued buildout of same-day and next-day delivery networks.

The spigot has been shut off.

Here’s where the thesis gets really compelling. While demand surges, the development pipeline is collapsing at a speed I haven’t seen in my career.

According to Cushman & Wakefield, total deliveries in 2025 came in at 281 million square feet — down 35% from 2024 and the lowest annual figure since 2017. But that’s the backward-looking number. The forward-looking data is even more dramatic. With Q4 deliveries declining 24% year-over-year, we are seeing a fraction of the square footage breaking ground and delivering compared to the 2022 peak. Colliers is forecasting that the construction pipeline for U.S. industrial real estate is expected to hit bottom in 2026.

Why the dramatic pullback? In many markets, the economics simply don’t work for speculative development right now. Prologis — the largest industrial REIT in the world — reported that replacement-cost rents sit roughly 20% above current market rents. That means a developer building a new warehouse today would need to charge rents 20% higher than what tenants are currently paying just to earn a reasonable return. That’s a non-starter for spec development. As a result, build-to-suit projects now represent 40% of the under-construction pipeline, up from historical norms in the mid-20s. The speculative supply that drove vacancy higher over the past two years is simply not being replenished.

Prologis projects that 2026 global completions will be the lowest since 2018. Let that sink in. We’re going to see less new industrial space delivered worldwide next year than in any year since before the pandemic — and demand is accelerating. The math is straightforward.

Vacancy has peaked — the evidence is clear.

This is the core of my thesis. The national industrial vacancy rate stood at 7.1% at the end of Q4 2025 according to Cushman & Wakefield — unchanged from Q3. CBRE’s measure, which uses a slightly different methodology, pegged it at 6.7%. Either way, the trajectory tells the same story: vacancy has stopped climbing.

Consider the progression. The year-over-year increase in vacancy as of Q4 2025 was just 50 basis points — the smallest incremental move since late 2022, when vacancy first began its upward march. After eight consecutive quarters of accelerating increases, the rate of change has flatlined. Big-box vacancy, which had been the most problematic segment, actually showed meaningful improvement. Among warehouses over 500,000 square feet, vacancy climbed to nearly 11% in Q4 2024 — up from a pandemic low of just 3.3% in Q2 2022 — but then fell to 9.5% by Q4 2025 as leasing picked up and developers pulled back. That 150-basis-point decline in big-box vacancy is one of the clearest confirmations of the peak vacancy thesis.

Part of the momentum comes from a wave of pandemic-era lease expirations forcing decisions. James Breeze, Head of Industrial Research for the Americas at CBRE, noted: “We’re starting to get closer to more larger tenants having to make decisions based on their portfolio, what they leased from 2020 to 2022.” That lease-expiration cycle is pulling forward demand that might otherwise have waited, and Tolliver at Cushman confirmed the effect: “A lot of this space that was on the market, which put downward pressure on rental rates, is getting absorbed very quickly.”

Cushman & Wakefield’s own forecast is direct: vacancy will stabilize through 2026 and begin tightening in 2027. Given the supply dynamics I just outlined — with starts collapsing and deliveries set to fall further — I think even that timeline may prove conservative. When you have demand growing at mid-teens percentages and supply shrinking by a third, the absorption of excess space happens faster than linear models predict.

In my view, we are standing at peak vacancy right now. Not six months from now, not a year from now — right now. And if history is any guide, the assets purchased at the peak of vacancy tend to generate the strongest returns over the subsequent five-year hold period.

Not all industrial will participate equally.

Not all industrial real estate will participate equally in the recovery, and that distinction matters enormously for how we allocate capital. The market is bifurcating along quality lines in a way that creates both risk and opportunity.

Modern, automation-ready buildings with 36-foot-plus clear heights, robust power infrastructure, and efficient column spacing are dramatically outperforming older vintage assets. Small-bay industrial — the last-mile facilities and shallow-bay distribution buildings that serve local delivery networks — is operating at sub-5% vacancy with virtually no new competitive supply. That segment never experienced the correction at all.

First Industrial Realty Trust, which operates one of the highest-quality portfolios in the sector, reported 32% cash rental rate increases on new and renewal leasing and maintained 94.4% occupancy through the cycle. That’s the kind of embedded rent growth that accrues to well-located, well-built assets regardless of the macro vacancy number.

Nationally, industrial rents have risen 53% over the past five years according to Cushman & Wakefield, with the average asking rent now at $10.18 per square foot, up 1.5% year-over-year even as vacancy climbed. That resilience in pricing tells you something important: landlords aren’t desperate. Concessions have ticked up modestly, but nothing remotely approaching distress. The fundamentals — tenant demand, limited alternatives, rising replacement costs — continue to support rent growth, albeit at a more moderate pace than the 2021–2022 sprint.

The implication for investors is clear. This is a market that rewards selectivity. Modern, well-located assets in markets with strong demand drivers will tighten faster and reprice more aggressively than the broader averages suggest. Older, functionally obsolete buildings in secondary locations may struggle to backfill. Know what you’re buying.