Industrial Leasing Hits Four-Year High as Data-Center Suppliers Reshape Warehouse Demand

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The U.S. warehouse market posted its busiest leasing quarter in four years as demand from data-center contractors, power-equipment suppliers and manufacturers added to the usual flow of freight and distribution tenants.

Industrial occupiers signed leases covering 202.6 million square feet during the third quarter, up 38.5% from a year earlier and 15.3% from the preceding quarter, according to JLL’s October 20 national industrial report. The figure was the highest since the third quarter of 2022. The firm’s figures cover leasing activity, rather than completed sales of industrial properties.

Demand is changing character. Third-party logistics companies still accounted for the largest share of leasing, at 17.9%, but construction materials and building fixtures represented 14.7%. Communications and technology tenants accounted for 7.5%, while energy and utilities users took 4.6%. JLL linked the changing mix to data-center supply chains, advanced manufacturing and defense-related expansion.

Data-center construction creates a second warehouse market

The data centers attracting investment are only the visible end of a much larger construction and supply operation. Electrical gear, cooling systems, generators, cabling and structural components must be stored, staged and delivered. Suppliers often need distribution buildings near large construction campuses, where lead times and transport distances affect installation schedules.

In Dallas–Fort Worth and the Washington, D.C., region, JLL observed suppliers and infrastructure providers clustering near hyperscale data-center projects. A Reuters report on the findings described that expansion as a contributor to rising warehouse rents. The research does not isolate the precise portion of national rent growth attributable to artificial intelligence projects, and it would overstate the evidence to credit the entire rebound to data centers.

Industrial net absorption reached 231.6 million square feet through September, already exceeding the full-year 2025 total, according to JLL. Absorption measures occupied space gained after accounting for space vacated; it is a different measure from gross leasing activity. The national vacancy rate stood at 6.8%, down 0.8 percentage points from a year earlier.

Large, modern buildings tightened more sharply. Vacancy among Class A warehouses exceeding one million square feet fell to 5.4%, compared with 9.5% a year earlier. Older and smaller properties did not share equally in the improvement. That divergence matters to owners assessing renovations and to lenders relying on appraisals built from nearby, but potentially mismatched, comparables.

Rents recover while construction accelerates

National industrial asking rents averaged $10.55 per square foot, an increase of 3.2% from the prior year and the fastest annual growth since the second quarter of 2024. These are asking rents, generally quoted on a triple-net basis, rather than actual net rents after concessions or tenant improvement allowances. Tenants under triple-net arrangements typically pay property taxes, insurance and certain maintenance costs separately.

Developers have responded. JLL counted 317 million square feet under construction, up 28.7% from a year earlier and 14.8% from the second quarter. That pipeline was the largest since early 2024. New supply can eventually relieve tightness, but large build-to-suit projects may be committed before delivery and may not become generally available to other tenants.

The investment market is moving as well. JLL’s preliminary industrial transaction volume reached $95.3 billion through the first nine months, up 38% from the comparable period in 2025. Reported capitalization rates held at 5.42%, even as the benchmark 10-year Treasury yield climbed. A stable sector-wide cap rate does not mean financing terms or property valuations are unchanged for every asset.

Other brokerages have recorded the same broad recovery using their own samples. Cushman & Wakefield’s third-quarter report found 76.6 million square feet of net absorption and said data-center-related users accounted for more than 8% of leasing activity year to date. The firms’ measurements are not interchangeable, but both point to stronger demand for newer logistics buildings.

The immediate risk is that development outpaces the tenants now driving expansion. Data-center schedules depend on power availability, equipment delivery and financing; warehouse landlords can be left with space if those projects slip. For now, JLL’s figures show an industrial market with strengthening occupier demand, tighter premium inventory and a larger construction pipeline.

Editorial image is illustrative; it does not depict a JLL-managed property or any named data-center campus.