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Developers Are Back to Building U.S. Warehouses

Developers Are Back to Building U.S. Warehouses

An 18% jump in warehouse construction signals the industrial market may have officially turned the corner.

Nina Dale
July 17, 2026

In partnership with

Good morning. The warehouse market is building again. Developers are restarting projects as leasing demand rebounds and AI infrastructure creates a new wave of industrial real estate demand.

CRE Trivia 🧠

Where can you find the narrowest house in the United States, a historic "spite house" built to block an alley and keep unwanted visitors away?

IN PARTNERSHIP WITH HINES

Now Available: Hines' 2026 Midyear Investment Outlook

What’s next for real estate’s recovery? Hines' 2026 Midyear Investment Outlook explores a market that is thawing—but unevenly.

Key takeaways:

Focus shifts from finding demand, to buying and delivering where supply is most challenged.
Capital markets have improved faster than leasing fundamentals.
Capacity constraints have been driving the notable opportunities.
Investment outcomes are likely to come from execution, not falling interest rates.
Conviction could matter more than market timing.

Subscribe to Hines Market Moves to receive the report.

*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.

Market Snapshot

S&P 500

GSPC

7,533.77

Pct Chg:
-0.51%

FTSE NAREIT

FNER

878.07

Pct Chg:
+2.34%

10Y Treasury

TNX

4.559%

Pct Chg:
+0.014%

SOFR

30-DAY AVERAGE

3.62%

Pct Chg:
-0.00

*Data as of 07/16/2026 market close.

Building Momentum

Developers Are Back to Building U.S. Warehouses

After a two-year slowdown, warehouse developers are breaking ground again as leasing demand rebounds and demand tied to AI infrastructure reshapes the industrial market.

By the numbers: More than 305 MSF of industrial space was under construction across the U.S. in the second quarter of 2026, an 18% increase year over year, according to Cushman & Wakefield. It marked the second straight quarter of annual growth, signaling renewed confidence after two years of elevated vacancies and excess supply.

Demand is leading: This construction cycle looks different from the pandemic-era boom. Developers are launching projects based on tenant demand rather than speculation, as industrial leasing posted its strongest quarter since mid-2022. After years of uncertainty, companies are finally moving forward with expansion plans.

Data centers drive demand: The rapid buildout of data centers is fueling warehouse demand as suppliers need space to store and distribute AI infrastructure equipment. Prologis plans to start $4.5B to $5.5B in new developments this year, with about 40% expected to be data centers.

Developers remain disciplined: Large developers are ramping up construction, but with more discipline than during the pandemic boom. Panattoni plans to start 62% more square footage than last year, while executives remain focused on projects backed by demand instead of speculative development.

Beyond AI: Warehouse demand is also being fueled by retailers building inventory ahead of potential tariffs, manufacturers expanding U.S. operations, and third-party logistics firms growing their fulfillment networks. Companies are also adding space to build more resilient supply chains after years of disruption.

➥ THE TAKEAWAY

Building on demand: The industrial market is recovering on a stronger footing than it was just a year ago. If leasing demand continues to improve, warehouse construction is likely to keep climbing through 2026.

✍️ Editor’s Picks

Claude now sources CRE deals: Terrakotta's Claude Agent is disrupting the CRE industry as we speak. Brokers can now automate LLC skip-tracing, find motivated sellers, and source off-market deals. (sponsored)
Banking rebound: Major U.S. banks are moving past CRE loan concerns as stronger earnings, lower loss reserves and AI-driven data center demand boost confidence.
Rate resilience: REITs have historically delivered positive returns during both rising and falling interest rate periods, with economic strength playing a key role in performance.
Sponsor direct: Unlike traditional marketplaces, Realberry connects accredited investors directly with the sponsor behind institutional-grade commercial real estate deals. (sponsored)
Midwest momentum: Investors are shifting away from oversupplied Sun Belt markets toward Midwest industrial opportunities driven by available land, power and logistics advantages.
Campus acquisition: SVN Commercial Partners closes a $6.5M sale of a former educational facility in Lauderdale Lakes.

🏘️ MULTIFAMILY

Ownership shift: Millennial homeownership surged 74% in five years, led by affordable Florida and secondary markets, while high-cost coastal metros continue to see strong renter demand.
Platform expansion: Milhaus merged with SRG Residential to create a $2.5B multifamily platform and significantly expand its development and property management footprint.
Supply cooldown: U.S. apartment deliveries rose slightly in Q2 2026 but remained well below recent peaks, signaling easing supply pressures after a historic construction wave.
Affordability gap: Improving housing supply is easing market pressure, but high homeownership costs continue to support long-term apartment demand despite near-term softness in multifamily fundamentals.
Insurance squeeze: Rising insurance costs are increasingly cutting into multifamily owners' profits as weaker rent growth and higher supply limit their ability to pass expenses on to renters.

🏭 Industrial

Big-box rebound: Strong demand for large warehouse leases is quickly absorbing surplus industrial space, giving landlords renewed pricing power and reviving the sector's recovery.
Expansion pitfalls: Mid-sized manufacturers face greater expansion risks than mega projects, making careful site selection essential to avoid costly long-term labor, infrastructure and operational challenges.
Leasing rebound: Big-box warehouse leasing has returned to Atlanta, reducing vacant industrial space and fueling a new wave of large-scale development.

🏬 RETAIL

Retail resurgence: Retail investment is gaining momentum as limited supply, low vacancy and steady consumer demand intensify competition for high-quality assets.
Investor demand: Retail property values continued to outperform CRE in June, fueled by strong investor demand, rising sale prices and limited new supply.
Retail acquisition: First Washington Realty acquired Bellevue’s 123,562 SF Evergreen Village, expanding its Pacific Northwest retail portfolio to 2.3M SF.

🏢 OFFICE

AI resurgence: San Francisco’s CRE market is showing its strongest recovery since 2019, with AI-driven office demand, improving leasing activity, and renewed institutional investment signaling a selective but accelerating comeback.
Soccer showcase: Major League Soccer unveiled its new 126,000 SF global headquarters at 2 Penn Plaza, featuring a stadium-inspired workplace designed to foster collaboration and reflect the league’s brand.
Richmond anchor: CoStar Group opened its new Foundry Park campus in Richmond, creating a 2M SF corporate hub designed to drive growth, attract talent and reinforce the future of office spaces.

🏨 HOSPITALITY

Resort expansion: Travel + Leisure Co. is acquiring Yes& Vacations and Spinnaker Resorts for $343M, adding 23 properties across key leisure markets like Maui and Hilton Head to expand its global resort portfolio.
Hotel megadeals: U.S. hotel investment surged in 2026 with major transactions, including Caesars Entertainment’s $17.6B sale and the $835M JW Marriott Marco Island deal.
Tennessee pitch: Tennessee is courting Paramount as the company considers leaving California, offering lower taxes and a business-friendly climate amid merger uncertainty.

📈 CHART OF THE DAY

A long-term decline in the U.S. population of 18-year-olds, driven by falling birth rates since 2007, points to fewer high school graduates over the next decade and significant implications for housing, community planning, and college enrollment.

CRE Trivia (Answer)🧠

Alexandria, Virginia. Built in 1830 by brickmaker John Hollensbury, the 7-ft-wide, 325 SF house was constructed to fill an alley where horse-drawn carriages scraped his home's walls and loiterers gathered. Today, it's one of the country's best-known examples of a spite house.

Developers Are Back to Building U.S. Warehouses

An 18% jump in warehouse construction signals the industrial market may have officially turned the corner.

CRE Trivia 🧠