CoStar expects U.S. industrial vacancy to peak in early 2027

U.S. industrial vacancy is projected to rise into early 2027, according to a revised forecast from CoStar, the leading global provider of online real estate marketplaces, information and analytics in the property markets.

The national industrial vacancy rate remains in the mid-7% range entering the second quarter of 2026 and is expected to edge higher into 2027 before beginning a gradual descent. The forecasted vacancy rate is slightly higher than previous expectations, as demand in 2027, while projected to remain higher than 2026 levels, is estimated to come in lower than the prior forecast.

Average annual rent growth over the 2026-27 period has been lowered, and is now forecasted at +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,” said 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."