Where Is the Industrial Market Rebounding?

While data centers continue to dominate headlines, industrial real estate is quietly regaining momentum—led by large institutional investors targeting modern logistics assets in strategic markets.

Recent acquisitions by Clarion Partners, Prologis, Blackstone, and Brookfield signal renewed confidence in warehouse properties, particularly those tied to ports, population growth, and advanced infrastructure.

Institutional Capital Returns—Selectively

Over the past year, Clarion Partners invested roughly $2 billion acquiring industrial properties that share a common profile: large footprints, modern features, and proximity to major U.S. ports.

One of its largest recent transactions included a $592 million purchase of seven fully leased properties totaling 2.2 million square feet across Los Angeles, the Inland Empire, and Seattle. Tenants include major occupiers such as Amazon and Best Buy.

According to Clarion leadership, industrial assets have largely been repriced after several years of interest rate pressure, opening the door for renewed transaction activity at scale.

At the same time, Prologis set a leasing record in 2025, with Los Angeles posting its highest warehouse leasing volume on record. Large-format buildings with high clear heights, ample parking, and robust power are seeing the strongest demand.

Brookfield Asset Management reinforced the trend with its $1.2 billion acquisition of Peakstone Realty, adding 76 industrial properties to its national portfolio.

A Rebound—But Not Everywhere

Despite renewed investment activity, the recovery remains uneven. National industrial vacancy is at its highest level in more than a decade, with expectations that it may rise slightly before stabilizing.

Still, demand improved meaningfully in the second half of 2025. According to market analysts, vacancy appears to be peaking, with rents beginning to stabilize or inflect in several markets.

Industrial sales volume rose 11% year-over-year, while pricing increased approximately 4% compared to 2024, reflecting improving investor sentiment.

Markets Leading the Recovery

The rebound is being driven by geographically specific demand, particularly in regions benefiting from population growth, logistics infrastructure, and manufacturing expansion.

Key outperforming markets include:

• Houston, where leasing activity is more than 60% above pre-pandemic levels and population growth continues to fuel logistics demand
• Phoenix, which recorded 15.3 million SF of net absorption in 2025, supported by logistics, retail, and advanced manufacturing
• The Southeast and Southwest, where leasing has been more consistent than coastal markets in recent quarters

In Texas, Blackstone acquired a 95% stake in a 6 million SF industrial portfolio, while Ares expanded its presence with acquisitions in Houston.

Why Modern Warehouses Are Winning

Tenants are prioritizing efficiency and long-term operating costs, widening the performance gap between new and older facilities.

Key tenant requirements include:

• Reliable and scalable power
• Efficient building flow and automation readiness
• Proximity to labor and transportation
• Flexibility for future growth

Automation is accelerating this trend. Amazon alone has deployed over one million robots globally, reshaping how space is used and reinforcing demand for newer, purpose-built facilities.

The AI Ripple Effect on Industrial Space

While Clarion does not invest directly in data centers, the AI boom is indirectly supporting industrial pricing. As land and warehouses are redeveloped for data centers and advanced manufacturing, traditional warehouse supply tightens—supporting rents over time.

Companies supporting data center development, from hardware manufacturers to maintenance providers, are also emerging as a growing source of warehouse demand.

Outlook

The industrial rebound is real—but selective. Capital is following leasing, and investors are concentrating on assets that meet modern tenant expectations in markets with durable demand drivers.

As tenant decision-making continues to firm up heading into 2026, industrial fundamentals appear positioned for gradual, market-specific improvement.

Looking for industrial opportunities or market insight? Connect with IPG to explore where demand—and capital—are moving next.