TAG Industrial Watch: May 2, 2026

This week, we wrap up Q1’s report card by checking on how TAG’s top markets performed. Starting with the largest industrial market, Chicago, the vacancy rate continued to buck the national trend, slipping 20 bps to 5.5%. Demand outpacing supply helped annual rent growth steady at 4.6%, nearly 3x the national rate. In America’s Heartland, consisting of Kansas City and Saint Louis, vacancies retreated 10 bps from its 10-year high to 5.8%. Nonetheless, rent growth slowed by 40 bps to 2.9%.

Moving down to Texas, vacancies continued to improve in Dallas, down 40 bps to 8.9% as demand steadied amid fewer deliveries that resembled pre-pandemic levels. However, rent growth decelerated by 130 bps on the quarter to 4.1%. The rise in oil prices helped to boost industrial demand year-over-year in Houston, but vacancies notched up 10 bps to 7.5% as supply edged out demand. After rebounding sharply throughout 2025, Houston’s rent growth abruptly dropped from 5.1% to 1.4% in Q1. Between San Antonio and Austin, weakening demand and steady supply drove vacancies up 60 bps to 13.5%, marking the highest level since full market coverage began 20 years ago. Annual rent growth managed to stay in positive territory, but gave up 30 bps to 0.5%.

Moving out west to Denver, the vacancy rate climbed 50 bps to 9.5%, just 10 bps shy of tying its record high. Mile High rents receded further into negative territory as the annual rate fell 140 bps to -1.8%. After posting back-to-back quarters of positive net absorption, industrial demand in Los Angeles contracted as annual imports from East Asia dropped, pushing vacancies up 50 bps to a new record high of 6.9%. Rent growth continued its negative trend, sliding 100 bps to -3.8% (CoStar, classes A, B, & C, minimum 10,000 SF).