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U.S. industrial demand may outpace supply by late 2027

CoStar forecasts the national industrial vacancy rate, already in the mid-7% range, will edge higher before starting a steady decline and turning rents modestly higher.

Reported · Written up by our desk · Industrial & Land

ConnectCRE, citing CoStar, said the U.S. industrial market is expected to reach a turning point by late 2027, when net absorption begins to exceed new supply as construction slows and demand improves.

CoStar expects industrial vacancy to rise slightly through the early part of next year, then trend gradually lower, with the vacancy rate in the mid-7% range as the market entered the third quarter of 2026.

The outlook reflects a modest upgrade from an earlier forecast, driven by stronger-than-expected demand in recent quarters that has led to an upward revision in near-term net absorption and a slightly lower vacancy outlook.

ConnectCRE also reported that CoStar expects average annual rent growth to be modest, with 2026 to 2027 rent growth forecast at 1.9%, and noted that elevated availability and a lingering supply overhang are expected to limit rent growth near term.

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