Industrial Firms Clear Away Glut of Big-Box Warehouses

Industrial firms are flocking to fill a glut of big-box warehouses nationwide.

Businesses are inking megadeals for the surplus of big-box warehouses originally built to meet projected post-pandemic demand before tariffs and a war in the Middle East reset the market, Bisnow reported.

Deals for more than 500,000 square feet lead the way, with tenants in the largest warehouses being squeezed with rent hikes at a faster pace than their smaller peers.

The supply of large buildings built during the pandemic is being snapped up at a quick clip. As a result, pricing power has shifted back to landlords, according to Bisnow

“We saw the vacancy almost evaporate in many markets where there were a number of big boxes available,” Stephanie Rodriguez, national director for industrial services at Colliers, told the publication. “All of a sudden, they were gobbled up.”

Vacancy for warehouses 750,000 square feet or bigger fell to 7.3 percent in the first quarter, from 8.3 percent a year earlier, according to Savills. Meanwhile, vacancy for industrial buildings between 200,000 square feet and 500,000 square feet rose to 10.9 percent, up slightly from the prior year.

The flurry of large deals drove leasing activity to highs not seen since the first half of 2022. Total industrial leasing hit 490 million square feet in the first six months of the year, up 27 percent from 2025, according to Savills.

The overall U.S. vacancy rate was flat year over year at 8.2 percent in June.

The spike in industrial deals reverses a pandemic supply boom, with large businesses pulling back because of whipsaw tariffs and the war between the U.S. and Iran, which drove up energy prices, according to Bisnow.

The volatility led to a record 1.5 billion square feet of empty big-box warehouses. Conversely, the Middle East war helped reverse the glut, according to Colliers.

Companies stockpiling supplies began gobbling up excess warehouses after the conflict began, hedging against higher fuel costs if the war dragged on. The fighting also boosted President Donald Trump’s push to return advanced manufacturing to the U.S.

Last week, Tesla signed a lease for 682,000 square feet in Austin in what had been the region’s largest speculative development. At the same time, Invesco scored a $42 million tenant lease for 522,000 square feet of warehouses in California’s Inland Empire.

A large slice of the demand is coming from third-party logistics companies, which can help distributors scale quickly, and the ecosystem of vendors that support data center development and operations, industrial broker Lisa Pittman of Cushman & Wakefield in Atlanta, told the publication.

Third-party logistics firms leased more than 30 million square feet in the first quarter, 20 percent of all leasing activity and a 65 percent spike in volume from a year earlier, JLL found.

Lease escalations for renewals on spaces 500,000 square feet or larger averaged 84 percent in the first quarter, more than double the pace of rent growth for smaller renewals, according to CompStak.

The average Class-A lease size, at 210,000 square feet, rose in the first three months of the year to its highest point since 2022, and 16.5 percent higher than in 2019. Meanwhile, deals for lower-class properties remain stable, with leases averaging 60,000 square feet.

– Dana Bartholomew