Crow Holdings Capital believes industrial fundamentals are normalizing as new construction decelerates and tenant demand improves. While performance remains uneven across markets, modern, efficient facilities in markets with balanced supply pipelines and durable logistics demand are better positioned than older, less functional assets.
Industrial supply growth has returned to its long-term average. As of Q1 2026, industrial deliveries had declined 54% from their 2023 peak to 240 million square feet, or 1.3% of inventory, while construction starts had fallen 69% from their 2022 peak. Deliveries are expected to decline further as the reduced pipeline works through the market. Although national vacancy increased to 7.5% and rent growth moderated to 1.5%, the slowdown in future supply should support a gradual recovery where demand remains stable.
Long-term demand drivers remain supportive. E-commerce represented 16.9% of total retail sales, matching its pandemic-era high, and manufacturing onshoring is contributing meaningfully to warehouse demand in markets receiving investment in semiconductors, electric vehicles and batteries, pharmaceuticals, aviation and medical devices. Tenants are also consolidating into newer facilities: buildings completed since 2020 recorded substantial positive absorption during 2024 and 2025, while older buildings experienced negative absorption.
Capital markets remain active but highly selective. Modern, well-located properties with functional layouts and strong tenant credit continue to trade competitively, while assets with greater obsolescence or lease-up risk are clearing at wider yields. CHC believes attractive opportunities will be concentrated in markets with stronger occupancy, balanced supply and favorable demographic and employment trends.
CHC continues to favor high-quality industrial assets and selectively pursue development opportunities in markets expected to return to occupancy equilibrium over the next two to three years, while exercising greater caution in markets with elevated excess inventory.
