TAG Industrial Watch: August 1, 2026
Starting in the Midwest, Chicago’s industrial demand slipped again in Q2 but remained in positive territory just ahead of supply, keeping the vacancy rate steady at 5.5%. Annual rent growth slowed 20 bps on the quarter to 4.6%, which sits well above the national average. Between Kansas City and Saint Louis, industrial demand dipped back into negative territory as supply remained meager, increasing the vacancy rate to a 12.5-year high at 6.1%. Rent growth experienced a 100-bps decline to 2.3%, returning to 2019 levels.
Moving down to Texas, industrial demand in Dallas outpaced supply again in the nation’s fastest-growing market of the last decade as vacancies retreated 10 bps to 8.7%. With rent concessions supporting demand, rent growth dipped 180 basis points to 2.7%, marking a 14-year low. The war-induced global oil shortage drove Houston’s industrial demand to nearly a two-year high, pushing vacancies down 20 bps to 7.3%. Despite the boost in demand, rent growth fell 280 bps to -0.3%, returning to negative territory for the first time since the aftermath of the Great Recession. Supply continued to grow faster in the combined markets of San Antonio and Austin, pushing the vacancy rate up 20 bps to a fresh record high of 13.5% since full market coverage began in 2005. The heightened availability decelerated rent growth by 120 bps to just 0.1%, representing the lowest since Q4 2010.
Heading out West to Denver, industrial demand and supply both stalled, allowing the vacancy rate to steady at a 22-year high of 9.5%. Nonetheless, rent growth dropped deeper into the red by 120 bps to -2.0%, hitting the lowest level since Q2 2010. Lastly, another round of tariff frontloading pulled industrial demand in Los Angeles back above water, slowing vacancies by 10 bps from its record high to 6.8%. However, rent growth declined another 120 bps to -4.0%, sitting just above the record low set in 2009. (All markets based on properties with a minimum of 10,000 SF and classes A, B, & C).
While declining rent growth has become the common denominator among all major industrial markets coast-to-coast, investors can still take advantage of record-high sale prices before property values begin to reflect market and economic fundamentals.
I N D U S T R I A L N E W S
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R E G I O N A L N E W S
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