Warehouse real estate is being rebalanced. Things to note are:

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After the pandemic-induced surge and subsequent rebound, demand and supply for warehouse real estate are finally beginning to balance out and new signs are emerging.

While e-commerce, which was a major driver of the recent boom cycle, is certainly not going away, more people are returning to brick-and-mortar stores. Warehouse tenants are now focusing on efficiency, power, and location over square footage.

New development has slowed, and federal policy has pushed manufacturing domestically, helping the sector contend with still high interest rates and economic uncertainty. Rents are not increasing as rapidly as they were a few years ago, and in some markets are actually declining slightly due to oversupply.

“Industrial real estate rents are showing signs of stabilization, indicating a more balanced market environment,” said Judy Guarino, managing director of commercial mortgage lending. JP Morgan Chasesaid in a note to investors.

Here’s what to look for in warehouses in 2026.

The large subsector refers to large, modern distribution and warehousing facilities that serve as hubs for logistics, storage, and e-commerce fulfillment. It accounts for about a quarter of the total industrial warehouse space in the United States.

Industry data shows vacancies are nearing their cyclical peak and new construction is shrinking. New supply still outpaced new demand in the first half of this year, but the gap has narrowed, according to a new Colliers study. Third-party logistics companies, including delivery services like Ryder and DHL that move goods on behalf of customers, are driving that demand.

“Demand in the third quarter was much higher than the entire first half of this year, which is another very strong indicator that supply and demand are starting to become more balanced,” said Stephanie Rodriguez, national director of industrial services at Colliers.

Large-format store vacancy rates across the 20 largest markets rose 19 basis points to 11% in the first half of the year, according to Colliers. Total new supply in the first half of 2025 was 48 million square feet, far less than the 330 million square feet completed at the peak of the cycle in 2023. Rents are expected to stabilize in the short term before starting to rise again.

Big boxes are a major segment of the overall warehouse real estate market, particularly driven by demand from online retailers and businesses seeking efficient supply chain operations. Recent economic and tariff policies have certainly shaken up that demand, but once those policies subside, even more demand could come back. Lower interest rates will also be another driving factor.

Supply chains that rely heavily on warehouse real estate are also undergoing changes that could increase demand. Prologis, the world’s largest logistics real estate company, lists specific supply chain trends to watch in its report titled “Bold Predictions for 2026,” including predictions that:

E-commerce companies will account for nearly 25% of new leases next year, with the proportion of goods sold online rising to around 20% globally by the end of the year. The need for power-enabled logistics facilities that can support automation and manufacturing will be the top three factors in location selection globally. U.S. and European defense demand will breathe new life into old industrial corridors and create a new class of specialized logistics assets. Reduced trucking capacity will result in double-digit rate increases expected in 2026, making transportation a larger share of total supply chain spending and increasing the value of well-located logistics real estate.

Power has emerged as a key driver across real estate portfolios. A recent report from global real estate investment manager Hines & Co. says that beyond the usual narrative around the e-commerce and data center sectors, power availability and network density are key pricing drivers.

According to the Hines report, “Demand for re/near shoring continues to accelerate, albeit slowly and with some uneven impact, but opportunities also exist for power-friendly infill assets that support faster, denser networks. Where once distance provided an advantage, now proximity creates one.”

Further research by Hines shows that net absorption of warehouses is correlated with manufacturing construction spending.

“This trend highlights another potential source of demand for the warehousing subsector, in addition to industrial manufacturing facilities,” the report said, predicting that reshoring alone could increase overall warehousing demand by about 35% over the next five years.

“Industrial land near ports remains important despite the volatile macroeconomic situation due to interest rate and trade policy uncertainties,” Guarino said. “While tariffs can lead to higher costs and supply chain challenges, these hubs are key to maintaining supply chain resilience and adapting to changes in trade.”

An example of the benefits of proximity: Amazon. The company’s logistics real estate strategy reflects broader national trends, prioritizing efficiency, automation and proximity to consumers over massive scale, according to a memo. co-star.

“This is an interesting turning point for industrial developers and REITs that have been riding the pandemic-era boom,” said Juan Arias, national director of industry analysis at CoStar Group.

Arias highlighted the slump in the leasing industry, noting that Amazon has moved into just 61 logistics facilities this year, down from 100 in 2024 and as many as 300 in recent years. Demand for larger facilities is at a seven-year low, Arias said, but there is still a focus on newer, taller buildings with an emphasis on modern, efficient distribution centers.

Like everything else, artificial intelligence and real estate technology are also impacting the warehousing sector. They help owners and operators analyze supply chains, traffic patterns, and data more efficiently. This is especially important when identifying potential warehouse locations. It also helps with inventory management and predicting maintenance needs, both of which reduce costs.