SUMMARY

Following an unprecedented post-pandemic development cycle, the U.S. industrial market is entering a new phase characterized by rapidly declining new supply and increasingly differentiated performance amongst various size categories. While the broader industrial sector continues to normalize, bulk logistics facilities exceeding one million square feet appear to be emerging as relative leaders, supported by tightening vacancy, structurally resilient occupier demand, and sharply reduced development pipelines.

• The supply wave is receding. Industrial construction has fallen to its lowest level in more than a decade, with the development pipeline for 1 MSF+ facilities declining nearly 70% from its 2022 peak.
• Bulk logistics fundamentals are improving first. Vacancy has fallen meaningfully across 500,000 SF+ facilities, while smaller warehouse segments continue to experience rising vacancy, signaling a bifurcated recovery.
• Structural demand remains firmly intact. E-commerce, third-party logistics, manufacturing reshoring, automation, and supply chain optimization continue to drive demand for modern large-format distribution facilities.
• Market selection is increasingly important. Several major logistics hubs for mega-industrial facilities, including Louisville, Dallas/Ft. Worth, Nashville, Phoenix, Philadelphia, and Chicago, combine rapidly shrinking development pipelines with improving vacancy trends, which may position them to outperform as the cycle advances.
• Compelling acquisition and development opportunities are emerging. Modern bulk logistics assets continue to trade at near or below replacement cost, while constrained future supply creates an attractive environment for welllocated speculative development to deliver into the next phase of the industrial recovery.