The national industrial real estate vacancy rate remained in the mid-7% range entering the second quarter and is expected to edge higher into 2027 before rolling into a gradual decline, according to a revised forecast from CoStar Group.
Under the revised forecast, average annual rent growth over the 2026-27 period has been lowered and is now predicted to rise by 1.6%, assuming continued downward pressure on rents in the near term, with a slower recovery toward 2% annual growth by late 2027.
“While leasing activity for industrial space has held up better than initially expected, the recovery path continues to lengthen as stabilizing demand struggles to fully absorb the new space delivered over the last four years,” said Juan Arias, national director of industrial analytics at CoStar Group. “That said, moderating new supply expected by early 2027 will likely drive a significant inflection point in vacancy and reaccelerate rent growth in the latter half of that year.”
“Risks to the forecast remain tilted to the downside,” added Arias. “Volatility around trade policy between the U.S. and other trade partners, persistent increases in tenant operating expenses and potentially subdued consumer spending on goods may continue to weigh on expansion decisions by industrial tenants. Conversely, if inflation eases and consumer confidence rebounds, absorption and rent growth across the industrial property sector could outperform expectations.”
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