February 2026 Industrial Report: Turbulence Builds in Port Markets

 Key Takeaways:

• With looming 100% tariffs on port cranes, geopolitical maneuvers at the Panama Canal and a Supreme Court decision reversing Liberation Day tariffs, port markets are looking at more instability in 2026. 

• In-place rents for industrial space averaged $8.94 per square foot at the end of January, marking a 5.1% year-over-year (Y-o-Y) increase. 

• Industrial vacancies reached 9.6% nationwide last month after a 160-basis-point (bps) hike since January 2025. 

• Currently, 355.7 million square feet of industrial space is being built across the U.S., practically unchanged from the start of 2025. 

• Industrial sales totaled $4.1 billion in January with New Jersey, Los Angeles and the San Francisco Bay Area logging the largest market-wide sales volumes. 

Regional Highlights:

• Western markets: California’s Central Valley remains the region’s most affordable market for industrial leases, but new lease premiums of $2 per square foot indicate that costs are on the rise.  

• Midwestern markets: Columbus, Ohio, currently has 12.2 million square feet of industrial space in the works, translating into a 3.7% inventory expansion — the second-largest increase nationwide. 

• Southern markets: Industrial vacancy rates stayed on the path to stabilization with average vacancies decreasing year-over-year in Houston, but continuing to rise sharply in Charlotte, N.C., and Tampa, Fla. 

• Northeastern markets: New Jersey recorded the largest year-to-date industrial sales volume at $372 million, with Boston also cracking the $100-million mark. 

Trade uncertainty looks poised to extend into 2026, promising to affect demand in U.S. container ports coming out of an already turbulent previous year. The Supreme Court’s invalidation of the “Liberation Day” unilateral tariffs promise to bring further volatility to a sector that relies on stability and certainty.

Trends & Industry News

Uncertainty to Extend into 2026 in U.S. Container Ports

With rapidly shifting trade policy and the constant threat of tariffs, 2025 proved to be a challenging year for U.S. shipping. As such, our U.S. industrial market report showed shipping volumes declined as the year went on.

Now, several factors stand to provide further turbulence to the industry in 2026. First of all, proposed 100% tariffs on Chinese-made port cranes were postponed late last year, but port operators remain wary of the prospect of prices doubling overnight. This factor has begun to disrupt port upgrade plans, as roughly four in five U.S. port cranes are produced in China and the largest cranes take approximately two years to deliver. Thus, many port authorities remain hesitant to place new orders.

At the same time, conditions are also shifting at the Panama Canal through which roughly 40% of U.S. imports pass. Here, a recent ruling from the Panamanian Supreme Court invalidated the port concession that was held for several decades by a Hong Kong conglomerate, and the Panamanian government proceeded to seize two port terminals following the decision. The Supreme Court cited irregularities in a 2021 China-backed extension of the agreement, and Danish shipping giant Maersk has taken over operations until a new contract is issued. While day-to-day operations at the canal will not change in the short term, geopolitical implications could prove meaningful in the long run.

Back in the U.S., the recent Supreme Court decision striking down many of the current administration’s “Liberation Day” tariffs could also prove consequential for port markets — and for the larger industrial real estate market. The U.S. Supreme Court decided that the president does not hold authority to impose unilateral tariffs, thereby removing one of the main tools of the administration’s trade strategy. In response to the decision, the administration announced a 10% global tariff, which it later raised to 15%.

“As the Supreme Court ruling sets the stage for continued uncertainty and extended litigation, we’re watching import levels closely, with the door potentially open for a wave of stockpiling similar to the beginning of 2025.” 

Peter Kolaczynski, Director, Yardi Research

The Supreme Court’s ruling may bring relief to U.S. ports, particularly those on the West Coast that receive the majority of shipping from China and other Asian trading partners. However, the tariff back-and-forth continues to send ripples in the supply and logistics sector which is reliant on stability and certainty to thrive. Of course, the global tariff and the potential for future tariffs are also on the minds of decision-makers in the industry.

Rents & Occupancy

Atlanta & Tampa, Fla. Lead Rent Growth

Our U.S. industrial market report shows in-place rents for industrial space averaged $8.94 per square foot at the end of January 2026 — $0.07 higher compared to December — to mark a 5.1% annual increase.

Atlanta continues to lead in-place rent growth following an 8% increase throughout the last 12 months. Other markets with high rent growth included Florida’s Miami and Tampa at 7.4%, followed by Philadelphia’s 6.8%.

Like many other markets in the Sun Belt, Tampa has seen consistent in-migration recently from other regions in terms of residents as well as businesses. This, in conjunction with a mid-sized port that’s essential to Florida’s supply chain, significantly contributed to rising demand for industrial space in the metro. Even so, local geography prevented significant development from being delivered in the recent industrial boom, as just 33.6 million square feet of space was delivered between 2020 and 2024 (12.2% of stock).

Yet, while vacancies in the market followed national trends and spiked in recent quarters, there is still strong demand for quality industrial space in Tampa. This fact contributed to the strong rent growth in the market despite high overall vacancies, as well as a significant spread between leases signed in the last 12 months and in-place leases at $3.61 per square foot.

Meanwhile, the average national industrial vacancy rate stood at 9.6% in January after a 160-bps increase annually. While several markets are reaching vacancy equilibrium, others are still behind the curve and seeing significant year-over-year vacancy hikes.

Industrial leases signed in the last 12 months averaged $10.07 per square foot, or $1.17 higher compared to national in-place rents. New lease spreads continue to narrow nationwide as more space delivered during the supply boom is absorbed, thereby giving tenants the upper hand when negotiating new lease agreements. 

Supply

Data Center Development Concentrated in Select Markets

There was 355.7 million square feet of industrial space under construction at the end of January, equivalent to a 1.7% expansion of national stock. Our U.S. industrial market report evidences that the national pipeline has been holding steady around the 350-million-square-foot mark for much of the last year as the industry continues to “rest and digest” after the previous supply glut.

Generative AI investments from tech giants are contributing to the largest data center boom in recent years. In fact, 2025 saw more data center development than 2020 through 2022 combined.

That said, the increase in data center construction was mostly concentrated in a few markets; the five largest destinations for data center development are now home to 17.6 million of the 30.8 million square feet of data center starts in 2025. In this case, the Washington, D.C. market that encompasses the Northern Virginia data center corridor leads the way with 6.1 million square feet being built. D.C. is followed by Dallas-Fort Worth (3.2 million), Phoenix (2.9 million), Atlanta (2.8 million) and Columbus, Ohio (2.6 million). In 2024, the same five markets claimed more than 20 million of the 34.8 million square feet of new data center developments, further underscoring their dominance in the niche.

At the same time, concerns regarding a potential AI investment bubble continue to grow, and investors are unsure if long-term demand projections are realistic. For now, near-term demand from hyperscalers will continue supporting the data center development boom. 

Transactions

Los Angeles Maintains Investor Attention With High-Profile Sale

Nationwide industrial transactions totaled $4.1 billion in January with sales averaging $166 per square foot.

Los Angeles logged $356 million in industrial transactions in January for a strong start to the year. The market was also home to the largest transaction so far in 2026 with the $123-million sale of the South Bay Distribution Center. The property was last traded as part of an $18.7 billion portfolio transaction in 2019 that saw Link purchase approximately 1,300 U.S. logistics properties from Singapore-based GLP. While the value of the South Bay Distribution Center is not evident from the portfolio deal, it was previously acquired by GLP for $33.6 million in 2013, meaning that the property’s value increased threefold since then.

Industrial prices across Southern California have risen rapidly in recent years. High shipping activity at the Ports of Los Angeles and Long Beach contributes to demand even as supply remains diminished in the Los Angeles market, as well as neighboring Orange County.

Mounting vacancies in recent quarters as well as fresh supply hitting the neighboring Inland Empire market have contributed to moderating rent growth, but investment activity remains elevated. To exemplify, average sale prices slipped by 13% between 2023 and 2025, but last year’s figure is still almost 50% higher compared to 2019 averages. 

Western Markets

California’s Central Valley Maintains Affordability Despite Rent Velocity

Industrial construction largely followed seasonal patterns throughout the Western U.S. in January as completed projects predominantly outpaced new groundbreakings. Here, Seattle’s pipeline stood at 3 million square feet of space underway at the end of January after declining 34% from the 4.6 million square feet recorded at the end of December and dropping nearly 39% Y-o-Y. Similar pipeline contractions emerged in Los Angeles (-30%), the Inland Empire (-33%) and Orange County (-56%). Conversely, industrial space under construction in the San Francisco Bay Area more than doubled compared to year-ago totals, reaching 4.2 million square feet.

Notably, California’s Central Valley maintained its position as the West’s most affordable market for industrial leases, with in-place rates averaging $6.80 per square foot. However, leases signed in the last 12 months averaged $8.78 per square foot — nearly $2 higher than in-place leases and representing the widest lease spread throughout the entire Western U.S., signaling substantial recent lease price acceleration. The region’s next-highest spreads between new and in-place leases emerged in the Bay Area ($1.95 per square foot) and Denver ($1.13 per square foot). The remaining Western markets commanded new lease premiums below $1 per square foot, reflecting lower leasing pressure.

Otherwise, average vacancy rates in Orange County rested at 8.5% at the end of January, remaining unchanged from December. With that, Orange County now represents the region’s tightest market despite a 350-bps increase compared to January 2025. The neighboring Inland Empire followed with a vacancy rate of 8.7% after a more moderate occupancy decline of 80 bps annually. Conversely, several Western markets positioned themselves above the national vacancy average of 9.6%, including Portland (9.7%), Seattle (10%) and Denver (12.2%).

Western markets opened 2026 with robust transaction activity. Los Angeles recorded $356 million in sales during January to claim the title of second most active market nationwide. The San Francisco Bay Area, Phoenix and Orange County followed with the third through fifth largest sales volumes nationally. In the Western U.S., average sale prices ranged from $391 per square foot in the Bay Area to $76 per square foot in Denver, although smaller sample sizes likely contributed to this broad spread. 

Midwestern Markets

Columbus Undergoing Significant Industrial Expansion

Vacancies throughout Midwestern industrial markets remained remarkably compressed in the current environment, led by Kansas City, Mo.’s 5% rate — the second-lowest among all major markets nationwide. Across the state, St. Louis matched that rate at the end of January after distinguishing itself with a 210-bps vacancy contraction compared to January 2025. Not far behind, Detroit (6.8%), Indianapolis (8.6%), Minneapolis-St. Paul (8.8%) and Cincinnati (9.3%) also recorded vacancy rates below the national benchmark of 9.6%. In contrast, Chicago continued to contend with one of the highest vacancy rates nationwide.

The Columbus industrial market is currently experiencing a substantial expansion phase. Projects underway here at the end of January totaled 12.2 million square feet of space, translating into a projected inventory increase of 3.7% for the largest in the region and the second-largest among all major markets nationwide. In terms of raw square footage, construction volume also remained elevated in Chicago at 13.6 million square feet. While construction activity accelerated regionally, depressed average sale prices contributed to comparatively modest sales volumes with only Chicago surpassing the $100 million threshold year-to-date.

As expected, all Midwestern markets registered average in-place lease rates below the national average of $8.94 per square foot at the end of January. More precisely, regional rents spanned from $5.14 per square foot in Kansas City, Mo., to $7.71 in Minneapolis-St. Paul. At the same time, rent appreciation in the last year remained sluggish across most markets with several Midwestern entries experiencing sub-3% growth and negative lease spreads during the trailing 12 months. 

Southern Markets

Houston Vacancy Rate Stabilizes Y-o-Y as Charlotte & Tampa Spike to 11%+

The Atlanta industrial investment market recorded $169 million in transactions during January, surpassing all other Southern markets. These transactions averaged $160 per square foot, outpacing the $132 average recorded during the same period in 2025. Following closely, Baltimore industrial sales totaled $129 million at the end of January as the market continued experiencing a sustained trend of robust industrial investment activity. Elsewhere, recent trends indicate that sale activity is likely to pick up later in the year in markets such as Dallas-Fort Worth and Houston.

Demand for industrial space in the South is also evident in regional rent growth metrics: Markets hailing from the region consistently commanded some of the widest new lease spreads nationwide with Tampa, Fla.’s $3.61 premium trailing only Bridgeport, Conn., at the national level. Then, Miami ($3.25 per square foot for fourth nationwide); Atlanta ($2.26, sixth); Nashville, Tenn. ($2.25, seventh); and Dallas-Fort Worth ($2.16, eighth) also recorded substantial lease spreads, demonstrating persistent upward leasing pressure. Rent appreciation also remained strong across these markets with Atlanta; Miami; and Tampa, Fla., posting the highest annual in-place rent increases in our study.

Houston was one of only four major markets nationwide where industrial vacancy rates decreased year-over-year. Our industrial property market report places the current vacancy rate at 6.3%, or 20 bps lower than the rate in January 2025. Occupancy also approached stabilization in Nashville, Tenn., with the current vacancy rate of 7.4% climbing only 60 bps compared to year-ago figures. Nevertheless, other Southern markets were earlier in the vacancy cycle, with industrial vacancies in Charlotte surging from 7.4% last year to 11.1% currently. Tampa followed a comparable trajectory, with the local average vacancy rate resting at 11.1% following a 320-bps spike.

Our industrial real estate market report shows that as vacancies progress toward equilibrium, the development surge centered on the Texas Triangle is poised to continue. Houston’s industrial pipeline totaled more than 21.5 million square feet, expanding another 11% month-over-month and 64% compared to one year ago. With that, the market is positioned for an inventory expansion exceeding 3% through current development projects. Meanwhile, the Dallas-Fort Worth construction pipeline remained the nation’s most substantial despite dipping slightly below 30 million square feet at the start of 2026. 

Northeastern Markets

New Jersey Leads 2026 Transaction Activity With $372M Sales Volume

In January, industrial markets throughout the Northeast continued to see accelerating rent growth and expanding new lease premiums as occupiers pursued additional space in high-volume markets. Specifically, Bridgeport, Conn., claimed the top national position for spreads between new and in-place leases at $4.85 per square foot with Boston ($3.34) and Philadelphia ($2.86) following closely in third and fifth positions nationwide, respectively. At 6.8%, Philadelphia also commanded the fourth-highest year-over-year rent growth nationwide, as well as the most substantial increase outside of the Southern region. Otherwise, New Jersey was the sole Northeastern market posting rent growth below the national average at 4.3%.

To that end, industrial transactions in New Jersey during January totaled $372 million to establish it as the most active market nationwide ahead of Los Angeles ($356 million) and the San Francisco Bay Area ($266 million). The market also led national sales volumes throughout the first half of 2025 before ceding ground to Dallas and Phoenix later in the year. Boston industrial transactions in the same period totaled $117 million, while that figure was $95 million in Philadelphia. Granted, sales totals early in the year may be reevaluated as more transactions are validated and logged.

Northeastern industrial markets generally recorded stabilizing vacancies in the opening month of 2026, avoiding the substantial annual occupancy declines experienced in other regions. Boston posted the largest Y-o-Y vacancy increase in the region at 130 bps, reaching a considerable 11.4% vacancy rate in January. Occupancy declined 40 bps in Philadelphia and just 30 bps in the Bridgeport over the trailing 12 months. With a current vacancy rate of just 4.5%, the Connecticut market represented the nation’s tightest industrial market in January — a distinction it also maintained throughout most of 2025.

Notably, Bridgeport’s industrial real estate pipeline now totals 4.5 million square feet, although that considerable total was driven by two just properties — a Uline warehouse totaling 1.26 million square feet in Plainfield, Conn., and an Amazon robotics fulfillment center spanning 3.2 million square feet that recently broke ground in Waterbury, Conn. Philadelphia and New Jersey maintained comparable pipelines at 4.9 million and 7.5 million square feet, respectively. 

Economic Indicators

Producer Price Index Jumps 50 bps in December

Producer prices recorded their biggest increase in five months in the last month of 2025 according to data recently released by the Bureau of Labor Statistics. The Bureau’s Producer Price Index (PPI) increased by 0.5% in December, largely driven by a 0.7% hike in the services component of the index while goods prices held steady. The annualized increase stood at 3.0%, with services being up 3.2% and goods marking a 2.4% increase.

A closer look at the PPI for Truck Transportation provides additional insight into the challenges and opportunities currently present in the industrial sector. This component of the services index was up 6% Y-o-Y in December and marked a 32% total increase since February 2020. In particular, rising shipping prices have placed significant pressure on operating costs and margins for industrial tenants while also contributing to fuel price increases in the better-known consumer price index (CPI).

Our industrial property outlook projects that continuing increases in trucking and transportation costs will drive further demand for last-mile facilities and other efficiency-enhancing categories of industrial space as companies keep looking for ways to optimize operations.

Methodology

The monthly CommercialCafe national industrial real estate report considers data recorded throughout the course of 12 months and tracks top U.S. industrial markets with a focus on average rents; vacancies (including subleases, but excluding owner-occupied properties); deals closed; pipeline yield; forecasts; and the economic indicators most relevant to the performance of the industrial sector. Listing rate and occupancy information was based on Yardi Research data.

• Average Rents: Provided by Yardi Market Expert, a cutting-edge service that uses anonymized and aggregated data from other Yardi platforms to provide the most accurate rental and expense information available.

• Vacancy: The total square feet vacant in a market, including subleases, divided by the total square feet of industrial space in that market. Owner-occupied buildings are not included in vacancy calculations.

Stages of the supply pipeline: 

• Planned: Buildings that are currently in the process of acquiring zoning approval and permits, but have not yet begun construction.

• Under Construction: Buildings for which construction and excavation has begun.

Sales volume and price-per-square-foot calculations for portfolio transactions or those with unpublished dollar values are estimated using sales comps based on similar sales in the market and submarket, use type, location and asset ratings, sale date and property size.

Year-to-date metrics and data include the time period between January 1 of the current year through the month prior to publishing the report.

Market boundaries in the CommercialCafe industrial report coincide with those defined by the CommercialCafe Markets Map and may differ from regional boundaries defined by other sources.

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