Compelling Opportunities Shaping Up for Industrial Development

Ana­lyz­ing Cur­rent Sup­ply vs. Fore­cast­ed Indus­tri­al Require­ments
 



Sup­ply ver­sus demand analy­sis points Hines Research to indus­tri­al devel­op­ment opportunities.

In 2025, indus­tri­al fun­da­men­tals began to reflect what Hines Research views as a nat­ur­al, cycli­cal slow­down, with demand eas­ing after the extra­or­di­nary lev­els seen dur­ing COVID. How­ev­er, much like the apart­ment sec­tor, which expe­ri­enced a dip in fun­da­men­tals in 2022 before rebound­ing with renewed demand, the indus­tri­al sec­tor appears to be posi­tion­ing itself for a strong set­up in 2026, paving the way for indus­tri­al and ware­house devel­op­ment. Notably, after a decline in occu­pied space dur­ing the sec­ond quar­ter of 2025, demand has since rebound­ed sharply, with near­ly 100 mil­lion square feet of pos­i­tive absorp­tion. At the same time, new con­struc­tion starts have slowed sig­nif­i­cant­ly, total­ing just 60 mil­lion square feet—equivalent to a mere 0.3% of the total U.S. indus­tri­al inventory.

  • There has been bet­ter pric­ing for this sec­tor, and fun­da­men­tals seem to be on the way to bot­tom­ing. That process may take a year or so, but then Hines Research expects the start of a new cycli­cal recovery.
  • Hines Research finds the case for indus­tri­al over the next five years com­pelling. There are sev­er­al trends all com­ing togeth­er to dri­ve demand – like e‑commerce and on/re-shoring, which should dri­ve an ongo­ing boom in man­u­fac­tur­ing con­struc­tion spend­ing. Analy­sis shows that man­u­fac­tur­ing facil­i­ty devel­op­ment spills over into ware­house demand.

Add it all up, and Hines Research esti­mates there could be almost 1.6 bil­lion square feet of new demand over the next five years. At the same time, there are only about 320 mil­lion square feet of space under con­struc­tion – just 1.7% of total U.S. indus­tri­al inven­to­ry. That’s not enough, and Hines Research believes there will be a need for a sub­stan­tial amount of new space, pro­vid­ing oppor­tu­ni­ty for development.

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