Q1 Industrial Market Shifts to Second-Generation Space as 1.3 Million Square Feet Remains Under Construction
Updated
Updated · Business Record · May 26
Q1 Industrial Market Shifts to Second-Generation Space as 1.3 Million Square Feet Remains Under Construction
1 articles · Updated · Business Record · May 26
Summary
Tenants in the Q1 industrial market increasingly chose second-generation space, helping absorb existing vacancy as speculative development stayed muted amid economic headwinds.
CBRE counted 1.3 million square feet under construction across 16 projects, up from 660,000 square feet in the prior quarter and the highest level since Q4 2022.
Broker reports showed vacancy between 6.9% and 8.5%, while average lease rates ranged from $6.25 to $7.08 per square foot and net absorption varied widely by firm.
JLL said several large occupiers are actively exploring the market, citing projects tied to Vermeer, MHC Kenworth, Baker Group and Norwalk’s $12 billion Tract data center agreement.
Colliers said demand remains strongest for small- to mid-sized spaces and owner-user activity in infill locations, a mix that could gradually tighten the market in 2026.