TAG Industrial Watch: July 25, 2026

Across the top 50 metros in the U.S., the initial reading of industrial demand during Q2 totaled about 38.0 million square feet (CoStar, classes A, B, & C, minimum 10,000 square feet). Demand made a big comeback compared to last year’s Q2 level, which has been revised slightly into positive territory at 672,000 square feet. With new supply dropping to a 10-year low at roughly 45.8 million square feet, the vacancy rate only ticked up 10 basis points to 7.8%, matching the highest level since Q4 2012. While availability was relatively stable during Q2, annual rent growth decelerated, falling 70 basis points to 1.5%, marking a 14-year low.

Quarterly demand for small industrial properties between 10,000 and 50,000 square feet pulled back from Great Recession levels in Q1 to just -205,000 square feet in Q2 as the vacancy rate notched up to 5.3%. Midsized properties between 50,000 and 200,000 square feet nearly matched small industrial with -214,000 square feet of net absorption, with the vacancy rate rising to 8.4%. With small industrial and midsized both in negative territory, 100% of industrial’s positive absorption was accounted for by big-box demand, a phenomenon that TAG first identified in last year’s demand figures. Net absorption among properties over 200,000 square feet stood firm at 38.4 million square feet. With demand starting to outpace shrinking supply, big-box vacancies slipped to 8.9%. Next week, we’ll analyze how the major markets covered by TAG Industrial performed during Q2.

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