The U.S. industrial real estate market is showing signs of a new development cycle, but developers are approaching this next phase with greater caution after years of construction that left many markets struggling to absorb new supply.
That’s one of the key findings in Colliers’ October 2026 U.S. research report, Building the Next Industrial Development Pipeline. The report examines how the industrial sector is working through a historic wave of new construction while identifying the markets and property types best positioned to support renewed development.
Nearly 1.9 billion square feet of industrial space has been delivered nationally since the start of 2022, expanding the country’s industrial inventory by approximately 11%. That construction boom peaked at the end of 2022, when 711 million square feet was under construction.
By the end of 2025, that figure had fallen to 271 million square feet as rising vacancy rates and an imbalance between supply and demand forced developers to pull back. The market is now showing signs of recovery. Space under construction increased 16% from its year-end 2025 low, reaching 314 million square feet in the first half of 2026. Construction starts also gained momentum, totaling 158 million square feet during the first six months of the year.
Still, the recovery is unlikely to produce another nationwide construction surge, according to Colliers. Instead, development is expected to return first to markets where vacancies have stabilized, modern industrial buildings are leasing steadily and competing supply has declined.
Recent deliveries continue to lease up
The amount of time a property has been on the market remains an important factor in determining how successfully industrial construction has been absorbed.
Buildings delivered in 2022 were 84% occupied, while those completed in 2023 were 70% occupied. The occupancy rate for 2024 deliveries stood at 61%. Overall, 73% of the 1.5 billion square feet delivered between 2022 and 2024 had been occupied.
More recently completed buildings have more work ahead. Properties delivered in 2025 were approximately 50% occupied, while first-half 2026 completions were 47% occupied. Combined, buildings delivered in 2025 and the first half of 2026 were approximately 49% occupied.
Much of the remaining vacant space is concentrated in these newer properties. Their continued absorption will help determine where developers can confidently resume speculative construction.
Midwest markets outperform
The Midwest has emerged as the nation’s strongest region for absorbing newly delivered industrial space.
The region added 334 million square feet between 2022 and 2024, a volume comparable to the construction activity recorded in the West. Yet 88% of the Midwest’s deliveries during that three-year period were occupied, compared with 73% in the Southeast, 70% in the West, 64% in the Northeast and 62% in the Southcentral region.
The Midwest’s advantage has continued with more recent construction. Of the 58 million square feet delivered in the region during 2025 and the first half of 2026, 82% was occupied. That compares with 48% in the Southeast, 45% in both the West and Southcentral regions, and 22% in the Northeast.
Across all deliveries since 2022, 87% of the Midwest’s new industrial supply was occupied, according to Colliers.
Individual Midwestern markets have also posted strong results. Dayton led the country, with 98% of its post-2022 industrial completions occupied. Columbus and Detroit each recorded 95% occupancy, while Omaha reached 93%.
Columbus is particularly notable because it combined substantial construction with strong absorption. The market added approximately 47.2 million square feet since 2022, expanding its industrial inventory by 15%, yet 95% of that new space was occupied. Its second-quarter 2026 vacancy rate was 5.2%.
Chicago also demonstrated its ability to absorb substantial development. The market added approximately 106 million square feet since 2022, including 74 million square feet of speculative construction and 32 million square feet built to suit. Approximately 82% of those deliveries were occupied, and the market’s second-quarter vacancy rate was 5.1%.
A more selective pipeline takes shape
The composition of construction underway offers another indication of how developers are adjusting their strategies.
The Midwest had approximately 72 million square feet under construction, with build-to-suit projects accounting for 54% of that pipeline. That makes the region an exception to the national pattern, where speculative development remains the dominant construction type.
Specialty industrial properties are another area in which the Midwest stands out. The region had 22.5 million square feet of manufacturing facilities, 29.4 million square feet of data centers and 5.3 million square feet of cold storage and food production facilities under construction.
The Midwest’s data center pipeline was nearly two-and-a-half times the 12 million square feet underway in the Southeast, the next-largest region for that property type. Its cold storage and food production pipeline was more than three times the total in any other region.
