TAG Industrial Watch: October 17, 2026

Starting off in the Midwest, industrial demand topped supply in Chicago during the third quarter, pulling the vacancy rate down 20 bps to 5.5%. Despite availability tightening, annual rent growth slowed 70 bps to 4.6% in the Windy City, settling at pre-pandemic levels. Moving down to Kansas City and Saint Louis, the two markets featured a combined vacancy rate of 5.7%, down 30 bps on the quarter as demand more than doubled supply. Nonetheless, rent growth decelerated by 80 bps in America’s Heartland down to 2.2%, matching levels last seen in 2019.

The rebound in industrial demand was also experienced in Texas, where net absorption nearly set a new record high in the Dallas-Fort Worth market, pushing the vacancy rate down 50 bps to 8.0%. Unfortunately, the historic amount of demand didn’t translate into strong rent growth as the annual rate slipped 170 bps in Q3 down to a 15-year low of 1.1%. In Houston, net absorption was supported by strong oil prices, but supply outpaced demand, pushing vacancies up 30 bps to 7.5%. The additional supply helped to push rent growth into negative territory for the first time since Q4 2010 at -0.7%. Between Austin and San Antonio, supply and demand essentially went hand-in-hand, maintaining the vacancy rate at the highest level since records began at 13.3%. Rent growth managed to stay in positive territory but fell 50 bps to a 15-year low of 0.3%.

Headed out west to Denver, demand topped supply to lower the vacancy rate by 20 bps to 9.3%. However, rent growth in the Mile-High City continued to decelerate deeper into negative territory by 70 bps to -1.3%, touching 16-year lows. Lastly, in Los Angeles, demand posted another positive quarter, but not enough to move the needle as vacancies remained near record highs at 6.8%. Rents fell deeper into the red, falling 60 pbs to -3.7% and inching closer to the record lows seen during the Great Recession.