June 2026 Industrial Report: Rising USMCA Uncertainty Threatens Cross-Border Logistics

Key Takeaways:

• The increasingly likely failure to renew the July 1 U.S.-Mexico-Canada Trade Agreement (USMCA) is bound to create severe planning uncertainty for cross-border automotive and advanced manufacturing supply chains that drive a significant portion of U.S. trade.
• A cooling construction pipeline has helped stabilize the national industrial vacancy rate at 8.8%, even as market-wide rent growth experiences a broader deceleration.
• Inland Empire industrial asset prices are pacing toward their lowest average since 2020 due to tariff volatility and a historic supply boom, dropping 40% from their 2022 pricing peak.

Regional Highlights:

• Bay Area industrial assets price per square foot jumps 130% Y-o-Y, reaching $332.
• Construction activity in Indianapolis went up 20% month-over-month (M-o-M) with projects such as the Pittsboro Commerce Center counting toward the market’s current 7.5-million-square-foot pipeline.
• As year-to-date sales hit $2.3 billion in Dallas, Houston’s 80% M-o-M transaction volume ($1.4 billion) increase places second within the region, overtaking Atlanta.
• Boston ranks fifth nationally in terms of price per square foot for year-to-date industrial sales ($231), behind several Western markets, such as Los Angeles ($274) and Orange County, Calif. ($282).

Trends & Industry News

Trade Policy Friction Threatens Supply Chains

A major long-term headwind is facing the North American industrial sector as the U.S.-Mexico-Canada Trade Agreement (USMCA)  is poised to miss its initial July 1 renewal deadline. Although missing this review date — which would extend the agreement for another 16 years — will not immediately terminate the pact, it does shift the deal into a rolling annual review process. As such, this transition introduces a fresh layer of policy uncertainty that has already weighed on industrial tenants, investors and developers for more than a year, consequently clouding the multi-year planning cycles that are essential to the sector.

The high-stakes nature of these negotiations stems from how deeply the agreement underpins North American manufacturing and logistics networks: The USMCA dictates the rules for roughly $2 trillion in annual trade, representing more than one-quarter of all U.S. trade activity. For instance, in 2026, Mexico and Canada dwarf China as the top trading partners for the U.S. with Mexico accounting for more than 16% of total year-to-date trade, Canada comprising more than 12% and China sitting at just above 6%.

To protect these massive networks, U.S. trade officials have concentrated their efforts on securing concessions via side-letters, add-ons and protocols, rather than attempting a full rewrite of the text, which would require congressional approval. However, Canadian officials are reportedly bracing for negotiations to drag on for years with a new agreement potentially delayed until 2029, when the current U.S. administration leaves office.

“The concern here is that prolonged negotiations and uncertainty hinder potential growth in the back end of the decade.”

Peter Kolaczynski, Director, Yardi Research

Until a resolution is reached, sectors with deeply integrated cross-border supply chains — such as the automotive and advanced manufacturing industries — face the greatest exposure. Furthermore, because individual components in these fields frequently cross borders multiple times during production, even minor regulatory or policy adjustments carry the potential to cascade into significant operational disruptions.

Rents & Occupancy

National Industrial Vacancies Stable at 8.8% as Rent Growth Slows

The national vacancy rate for industrial space stood at 8.8% in May 2026, representing a modest, 30-bps increase in the last 12 months. Specifically, vacancy rates have stabilized in recent quarters, aided by a cooling supply pipeline following historic construction highs and a normalization of tenant demand. Concurrently, national in-place rents averaged $9.12 per square foot in May, marking a four-cent increase compared to the previous month and a 5.2% rise since last year.

This solid performance comes despite a broader, market-wide deceleration in pricing momentum. While California’s Inland Empire led the nation with an 8.1% annual increase from in-place rents, this figure underscores the widespread cooling: Just two years prior, seven of the top 25 markets outpaced that growth rate. Similarly, only seven of the top 25 markets topped a 6% annual growth rate in May 2026, compared to an additional 10 markets hitting that benchmark two years ago.

That said, the relationship between vacancies and price gains remains highly localized. For instance, Boston’s in-place rents climbed 6.3% despite the market holding one of the highest rates among top tiers. However, this inflation is driven by structural obsolescence, rather than low demand, as roughly one-third of Boston’s industrial inventory was built prior to 1970 and this older stock struggles to retain or attract tenants looking for the latest amenities. Meanwhile, tenants in Bridgeport, Conn., paid the highest premium for freshly signed spaces with new leases commanding $3.15 more per square foot than the market’s average in-place rate.

Nationally, leases signed in the last 12 months averaged $10.06 per square foot — a 94-cent premium above average in-place contracts. Notably, this lease spread has contracted substantially in recent quarters as frantic competition eases and tenants face less pressure to pay steep premiums for new space. However, significant pricing gaps persist in choice regions alongside Bridgeport, Conn., including Miami ($3.02 more per foot), Boston ($2.60), Dallas ($2.45) and California’s Bay Area ($2.31).

Supply

Kansas City, Mo., Industrial Supply Moderates After Historic Construction Wave

Across the United States, industrial construction activity currently sits at 383.2 million square feet, representing 1.8% of the nation’s total inventory. This broader cooling trend is highly visible in Kansas City, Mo., which is experiencing a period of moderating supply following a development boom. Between 2020 and 2025, the market delivered a massive, 54.9 million square feet of space — equivalent to 17.6% of its stock. In contrast, only 3.5 million square feet is currently under construction with roughly an equal amount of space in the planning stages.

While logistics operations dominate the local landscape due to Kansas City’s central location and extensive highway and rail networks — accounting for more than 80% of all deliveries this decade — the single-largest completion during this period was actually a manufacturing project: Last year, Panasonic opened a 4.7-million-square-foot electric vehicle (EV) battery plant in DeSoto, Kan., which stands as the largest facility of its kind in the country and was backed by $830 million in state tax credits.

However, full production at the DeSoto facility was delayed due to a combination of slowing EV sales and the elimination of federal tax credits under the One Big Beautiful Bill Act. Responding to these shifting market pressures, Panasonic announced this month that it’s pivoting some of its production lines at the plant to manufacture batteries for data centers, instead.

Transactions

Inland Empire Prices Soften Despite Historic Long-Term Returns

Nationally, Yardi Matrix recorded $31.5 billion in industrial transactions through May with properties trading at an average of $139 per square foot. However, the pricing landscape looks noticeably different in California’s Inland Empire, where the average sale price for industrial assets has dropped to $172 per square foot to start the year.

What’s more, if the trend continues throughout the rest of the year, 2026 will mark the market’s lowest average sale price since 2020. This figure represents a 23% decline from last year and a 40% drop from the market’s peak pricing achieved in 2022. Granted, future transactions (especially for larger industrial assets) could still pull this year-to-date baseline upward. However, current investor enthusiasm has been tempered by tariff-induced volatility and an ongoing effort to absorb a historic construction boom, even though long-term demand fundamentals for the market remain solid.

Despite this recent price correction, Inland Empire industrial assets acquired over the last decade continue to provide a solid return on investments. This is highlighted by the market’s largest transaction so far this year: Clarion Partners purchased a 1-million-square-foot industrial facility in Riverside, Calif., for $145 million. The property, which is fully leased to Amazon, was sold by Invesco for more than 80% more than what Invesco originally paid to acquire the asset back in 2017.

Western Markets

Bay Area Industrial Assets See 130% Year-over-Year Jump in Price Per Square Foot

Rents continued their upward trajectory in Inland Empire, Calif., to reach $12.42 per square foot in May. Now, the current premium for new leases is around $1 compared to in-place rents. It’s the first fractional drop in lease rates since the start of the year in what remains the most expensive industrial market as average rents in California’s Orange County decreased by 50 bps M-o-M to 17.71%. Additionally, during the last month, Central Valley and the Bay Area saw the most meaningful movements in terms of their lease pricing after dropping 180 bps and 120 bps in valuation, respectively.

Nearby, Central Valley in California recorded a 470-bps Y-o-Y hike in its industrial vacancies, which was significantly more than what other Western markets — such as Seattle; Portland, Ore.; or California’s Bay Area — had to contend with across the same period. For example, last May, vacancy rates in The Valley hovered just below the 10% mark, whereas, 12 months later, that number has gone up to 14.5%. Otherwise, vacancies for industrial spaces in Seattle; Portland, Ore.; and the Bay Area remained stable, registering minimal movements month-over-month.

At the same time, year-to-date sales in Portland, Ore., jumped 167% from the previous month with transactions such as the $223-million deal for the 496,000-square-foot T5@Portland bringing the market’s total volume up to $374 million. Plus, year-over-year, the Portland, Ore., industrial market has become even more active with trading volume rising by an impressive 484% to bring up costs per square foot, as well, by 55.1% throughout the same period. However, the most substantial year-over-year increases in pricing per square foot for industrial assets across Western markets took place in the Bay Area. Here, averages went from $144 to $332 for a 130% increase.

Not to be outdone and with 25 million square feet under construction as of May, Phoenix boasts the second-most-active market for industrial development nationwide, behind only Dallas with 32.5 million square feet. Here, three major construction projects (each more than 1 million square feet in size) have broken ground recently — two suburban developments in Glendale, Ariz., and Stack’s PHX02 Campus, a 1.8-million-square-foot industrial space in Phoenix. These, along with other projects that are currently underway, make up 5.5% of Phoenix’s existing stock. Furthermore, if we add developments that haven’t broken ground yet, but are in the planning phase, the total rises to nearly 16% of the overall inventory.

Midwestern Markets

Indianapolis Industrial Pipeline Expands 20% M-o-M to 7.5 Million Square Feet

Chicago year-to-date sales reached $1.546 million in May, which was up 42% M-o-M with pricing per square foot around $91. In particular, Realty Income acquired a 910,800-square-foot warehouse for $124 million in the largest single-property deal for an industrial space in Chicago in the last five years, while Investcorp’s $200-million, multi-market portfolio included key logistics assets in the Chicago market. Further north, Minnesota’s Twin Cities witnessed the highest month-over-month increase in sales to total $260 million — following an 86% hike — while transactions in Columbus, Ohio, averaged the highest price per square foot transacted across the region at $115.

Similarly, construction activity in Indianapolis accelerated in the last month, expanding the market’s industrial pipeline by 20% to a total of 7.5 million square feet. Noteworthy starts in Indy include a 500,000-square-foot manufacturing facility within Opus’ new Pittsboro Commerce Center industrial development, as well as a two-building development by locally based Ambrose Property Group for a total of 255,000 square feet of warehousing and industrial space in Indianapolis’ Greenwood suburb.

Next, Kansas City, Mo., recorded the highest month-over-month rent increase across all major U.S. markets (3.5%), but nevertheless remains one of the most affordable options for renting industrial space with an average lease rate of $5.28 per square foot. Then, across Midwestern markets, Cincinnati and Minnesota’s Twin Cities boasted the next-most-significant rent increases in the last 12 months with new leases carrying an 80-cent premium compared to in-place agreements. Detroit is the only market within the region where lease rates dropped since April, shaving off 130 bps from asking prices.

And, despite a 230-bps decrease, vacancies for industrial spaces in Cincinnati remain some of the highest in the region at 8.1% — albeit still below the nationwide 8.8% average. Chicago, however, has gone beyond that threshold, approaching 10% in May. Looking at year-over-year changes, Indianapolis and Columbus, Ohio, achieved the most noteworthy reductions in their industrial vacancies after bringing down their respective rates by 330 bps and 210 bps.

Southern Markets

Dallas Industrial Property Transactions Exceed $2 Billion

The addition of four large-scale industrial developments to Atlanta’s pipeline — including two properties totaling 2.45 million square feet in River Park E-Commerce Center in Jackson, Ga. — has resulted in a 44% M-o-M expansion. With that, this increase was not only the largest within the region, but also nationally, bringing Atlanta’s current total to 14 million square feet under construction. Likewise, Dallas has also expanded its lead after increasing its pipeline by another 13.5% in May to rest at 32.5 million square feet.

Meanwhile, despite a slight increase since last month, vacancies for industrial spaces in Memphis, Tenn., fell by 140 bps Y-o-Y to rest at 10.9% as of May. That’s the second-highest value for this indicator across major Southern markets, behind only Miami, which has maintained a relatively stable rate around the 11% to 12% mark since the start of the year.  Vacancies in Baltimore; Charlotte, N.C.; and Tampa, Fla., are also all above the nationwide average.

However, Miami and Dallas have the widest lease spreads among top industrial markets with premiums of up to $3 for newly signed agreements compared to in-place rents. Miami industrial spaces are also among the costliest nationwide, currently commanding $13.73 per square foot, after having gone up nearly 7% in the last 12 months. Similarly, Baltimore lease rates — the second-highest in the region — have increased by 230 bps since last month to settle at $9.47 per square foot.

Clearly, sales activity has been robust throughout the South in May with Dallas transactions exceeding $2 billion and several other markets with month-over-month increases in the high double-digits. For instance, Houston year-to-date sales totaled $1.35 billion following an 80% hike, while roughly $675 million in industrial assets changed hands since the start of the year in Charlotte, N.C., (a 78% increase compared to the previous month). In these cases, major transactions included the sale of the 1-million-square-foot industrial facility at Rankin Yards in Houston and the record-setting, $100-million deal for Legacy Park East, an 851,500-square-foot industrial space in Charlotte, N.C.

Northeastern Markets

Price per Square Foot Valuation for Boston Industrial Space Surges 56% Y-o-Y

In terms of vacancy rates, Boston saw no movement month-over-month to maintain its 12.1% figure. That said, year-over-year, vacancies for industrial and warehouse spaces in Boston have increased by roughly 160 bps. At the same time, Philadelphia’s rates went up 230 bps compared to last year for the most significant jump across Northeastern markets.

Then, New Jersey ranked third across top U.S. industrial markets for year-to-date sales by coming in with a total of $1.51 billion. Here, deals included the $360-million acquisition of the 1.7-million-square-foot Anheuser Busch logistics facility in Newark, N.J., closing in May. For comparison, assets worth roughly $960 million were traded on the Philadelphia industrial market, which was up 34% M-o-M. Yet, in terms of valuation, it was Boston that stood out by boasting the fifth-highest price per square foot nationally ($231), following a 56% Y-o-Y increase.

With the addition of projects such as Amazon’s multi-phase Keystone Trade Center campus and the 1.4-million-square-foot DrinkPak manufacturing facility to its pipeline, Philadelphia’s under-construction developments now total 8.7 million square feet — up 35% M-o-M. Otherwise, Boston is the only other Northeastern market to witness an expansion of its pipeline, albeit by a much more modest 5% since April, to bring it to a current total of 2.2 million square feet.

Notably, rents for industrial spaces in Bridgeport, Conn., and Boston claim some of the highest premiums nationally with new leases fetching around $3 more than in-place contracts: Average asking prices in May stood at $12.42 per square foot in Boston and $10.32 per square foot in Bridgeport, Conn.

Economic Indicators

E-Commerce Sales Expansion Brightens Long-Term Industrial Outlook

Online retail activity is experiencing a significant resurgence with e-commerce sales totaling $326.7 billion in the first quarter, according to the U.S. Census Bureau. This figure reflects a 2.7% sequential quarterly increase and a 9.8% Y-o-Y expansion. When adjusted for inflation, online sales volume grew 7.2% annually, considerably outperforming the 2% inflation-adjusted growth recorded for core retail sales as a whole. Driven by this momentum, e-commerce’s share of core retail sales climbed 30 bps during the quarter to reach 19.8%.

This sudden acceleration marks a turning point for the sector: Following a record-setting, pandemic-driven spike in the second quarter of 2020, e-commerce’s share of core retail sales essentially stalled for nearly five years. However, steady growth has returned throughout the last year to lift the first-quarter market share to just under that historical all-time high — a benchmark it could potentially eclipse later this year.

Accordingly, this robust online sales trajectory offers a positive signal for an industrial sector that’s currently navigating multiple near-term headwinds, including tariffs, escalating energy costs and widespread supply chain turmoil.

Methodology

The monthly CommercialCafe national industrial real estate report considers data recorded throughout the course of 12 months and tracks top U.S. industrial markets with a focus on average rents; vacancies (including subleases but excluding owner-occupied properties); deals closed; pipeline yield; forecasts; and the economic indicators most relevant to the performance of the industrial sector. Listing rate and occupancy information was based on Yardi Research data.

• Average Rents: Provided by Yardi Market Expert, a cutting-edge service that uses anonymized and aggregated data from other Yardi platforms to provide the most accurate rental and expense information available.

• Vacancy: The total square feet vacant in a market, including subleases, divided by the total square feet of industrial space in that market. Owner-occupied buildings are not included in vacancy calculations.

Stages of the supply pipeline: 

• Planned: Buildings that are currently in the process of acquiring zoning approval and permits, but have not yet begun construction.

• Under Construction: Buildings for which construction and excavation has begun.

Sales volume and price-per-square-foot calculations for portfolio transactions or those with unpublished dollar values are estimated using sales comps based on similar sales in the market and submarket, use type, location and asset ratings, sale date and property size.

Year-to-date metrics and data include the time period between January 1 of the current year through the month prior to publishing the report.

Market boundaries in the CommercialCafe industrial report coincide with those defined by the CommercialCafe Markets Map and may differ from regional boundaries defined by other sources.

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