Warehouse real estate is rebalancing. Here’s what to watch for
A large industrial warehouse contains rows of shelves full of packages as two workers in safety gear walk by and inspect the warehouse. It exemplifies space efficiency and systematic inventory management.
Witthaya Prasongsin | An | Getty Images
A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and emerging opportunities for real estate investors, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. become a member to receive future editions straight to your inbox.
After a pandemic-induced surge and a subsequent downturn, warehouse real estate supply and demand are finally starting to stabilize and showing new signs of life.
E-commerce, which was the main driver of the last boom cycle, certainly hasn’t gone away, but more people are returning to bricks and mortar. Warehouse tenants are now focusing on efficiency, power and location rather than square footage.
New developments have slowed and federal policies are pushing to support manufacturing, helping the industry weather still-high interest rates and economic uncertainty. Rent increases are no longer as steep as they were a few years ago and are falling slightly in some markets due to oversupply.
“Industrial property rents are showing signs of stabilization, indicating a more balanced market environment,” said Judy Guarino, general manager of commercial mortgage lending. JPMorgan Chasein a note to investors.
Here’s what to watch out for in warehouses in 2026.
big box
The big box subsector refers to large, modern distribution and warehouse facilities that serve as hubs for logistics, warehousing and e-commerce fulfillment. Accounts for nearly a quarter of total industrial warehouse space in the US
According to industry data, vacancies are near seasonal peaks and new construction is shrinking. New supply still outpaced new demand in the first half of this year, but the gap has narrowed, according to new research. Colliers. Third-party logistics companies, including delivery services such as Ryder and DHL that move goods on behalf of the customer, are leading this demand.
“Third quarter demand exceeded the entire first half of the year, another strong indication that supply and demand are becoming more balanced,” said Stephanie Rodriguez, national director of industrial services at Colliers.
The overall big box vacancy rate in the top 20 markets rose 19 basis points to 11% in the first half of the year, according to Colliers. New supply totaled 48 million square meters in the first half of 2025; This was much less than the 330 million square feet completed at the peak of the cycle in 2023. Rents are expected to stabilize in the near term before starting to grow again.
Big-box is a key segment of the public warehouse real estate market, driven primarily by demand from online retailers and companies seeking efficient supply chain operations. Recent economic and customs policies have certainly shaken this demand, but as these policies fall into place more demand may return. Low interest rates will be another driver.
supply chain
There is also a transformation in the supply chain, which relies heavily on warehouse real estate, that could increase demand. In a report titled “Bold Predictions for 2026,” Prologis, the world’s largest logistics real estate company, highlighted specific supply chain trends to watch, including the following predictions:
- E-commerce companies will account for around 25% of new rentals next year, as the proportion of goods sold online rises to almost 20% globally by the end of the year.
- The need for power-ready logistics facilities that can support automation and production will be among the top three factors worldwide in site selection.
- Defense-related demand in the US and Europe will breathe new life into old industrial corridors and produce a new class of specialized logistics assets.
- Additionally, shrinking trucking capacity will result in double-digit rate increases in 2026, enabling transportation to account for an even larger share of total supply chain spending and increasing the value of well-located logistics real estate.
Strength
Power is emerging as a leading driver in real estate portfolios. Beyond the usual narrative around the e-commerce and data center industry, power availability and network concentration are becoming important pricing catalysts, according to a recent report from global real estate investment manager Hines.
“As demand for re/proximity continues to accelerate, albeit slowly and with a somewhat uneven impact, opportunity also lies in power-advantaged infill assets that support faster, denser networks, where distance once provided an advantage, now proximity creates it,” the Hines report said.
reshore
Hines’ further research shows that warehouse net absorption is related to manufacturing construction spending.
“This trend highlights another source of potential demand not only for industrial manufacturing facilities, but also for the warehouse subsector,” according to the report. Reloading alone could increase overall warehouse demand by roughly 35% over the next five years, the report predicts.
“Despite the volatility in the macroeconomic landscape driven by interest rate and trade policy uncertainties, industrial properties near ports remain vital,” Guarino said. he said. “Tariffs could lead to higher costs and supply chain challengeshowever, these locations are key to maintaining supply chain resilience and adapting to business changes.”
Proximity
An example of the proximity advantage: Amazon. The company’s logistics real estate strategy reflects a broader national trend to prioritize efficiency, automation and consumer proximity over sheer scale. CoStar.
“This is an interesting turning point for industrial developers and REITs that are riding the pandemic-era boom,” wrote Juan Arias, national director of industrial analytics at CoStar Group.
Underlining a slowdown in leasing, Arias noted that Amazon occupied only 61 logistics properties this year, a figure of 100 in 2024, and up to 300 in recent years. Demand for larger footprint facilities has reached its lowest level in seven years, but there is still a trend toward newer, taller buildings that emphasize modern, efficient distribution centers, Arias said.
