By Liz Young
Demand is bouncing back for the biggest warehouses after several years of slow leasing activity.
Companies signed 146 leases across the U.S. for warehouses over 500,000 square feet last year, up more than 31% from the previous year to the highest level since 2022, according to real-estate firm Cushman & Wakefield. Forty-two of those agreements were signed in the fourth quarter, the most activity in a quarter since the third quarter of 2022, according to Cushman.
Real-estate executives and researchers say the activity is a sign that tenants are back in the market for new space after years of weak demand following a period of frenzied expansion during the pandemic. The latest wave of demand is being fueled by companies setting up U.S. manufacturing, suppliers to the data-center construction boom and retailers outsourcing their fulfillment operations to third-party logistics providers.
"The market is stabilizing and rebounding much faster than anybody really anticipated," said Jason Tolliver, president of logistics and industrial for the Americas at Cushman.
The leasing slowdown had been particularly acute among the big, sprawling buildings that were in hot demand for years among e-commerce operators such as Amazon.com. Those warehouses are typically more expensive.
A flood of newly built space hit the market just as tenants slowed their leasing decision-making, driving up availability. The vacancy rate for warehouses over 500,000 square feet climbed to nearly 11% in the fourth quarter of 2024, compared with a pandemic-era low of 3.3% in the second quarter of 2022, according to Cushman.
As leasing demand picked up late last year and developers pulled back on new construction, availability for the largest buildings fell to 9.5% in the fourth quarter of 2025, Cushman said.
"A lot of this space that was on the market, which put downward pressure on rental rates, is getting absorbed very quickly," Tolliver said.
The uptick in demand for big warehouses is being driven by third-party logistics companies and manufacturers, including companies moving production to the U.S. from overseas.
Elizabeth Holder, senior research analyst at real-estate firm JLL, said third-party logistics providers are taking big new buildings to accommodate demand from retailers and other businesses looking to reduce complexity by outsourcing their fulfillment operations.
There is also increased demand from companies supplying electrical systems, power racks and other hardware to support the massive data-center build-out across the U.S., said Mark Russo, head of industrial research at real-estate firm Savills.
"Construction in the housing industry has long been a demand driver for industrial, particularly in population growth markets. Now this data-center construction boom is starting to be a bit of a demand driver for industrial," Russo said.
Another dynamic driving new leasing is that some companies are nearing the end of lease agreements struck during the pandemic. "We're starting to get closer to more larger tenants having to make decisions based on their portfolio, what they leased from 2020 to 2022," said James Breeze, head of industrial research for the Americas at real-estate firm CBRE.
Write to Liz Young at liz.young@wsj.com
(END) Dow Jones Newswires
March 11, 2026 07:00 ET (11:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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