Following the first half of 2026, the US industrial market is on a solid footing. This is evident in stronger letting activity, a calming development compared to pandemic-era peaks, and a new wave of investment in the manufacturing sector reshaping demand. National asking rents rose by 1.8 per cent year-on-year to $9.74 per square foot annually on a triple-net basis, although vacancy rates and availability of sublease space increased, according to a report by Savills.
After two years of persistently high completions, the national vacancy rate stood at 8.2 per cent at the end of the second quarter, unchanged from the first quarter and only 10 basis points higher than a year ago. Industrial space lettings reached 491 million square feet in the first half of the year, which is 27 per cent more than in the first six months of 2025. These figures represent the third-highest half-year result in history, behind the boom years of 2021 and 2022, which were driven by the pandemic.
Transactions for larger spaces, particularly leases over 750,000 square feet, are significantly driving national activity. Large distributors and logistics users are regaining confidence after experiencing months of uncertainty due to tariffs and supply chains, as noted by Savills. As a result, quarterly net absorption more than doubled year-on-year, reaching 53.3 million square feet, while absorption in the first half of the year was 28 per cent higher than in the same period in 2025. Concurrently, the re-evaluation in industrial construction continued. The national pipeline increased moderately to 320 million square feet, less than half of the peak of 782 million square feet in late 2022. Completions fell to 49.4 million square feet in the second quarter, compared to over 82 million square feet in the same period last year.
At the same time, demand for industrial space is diversifying. While logistics remains the sector's engine, manufacturing is growing significantly. Savills recorded almost 66,000 newly advertised manufacturing jobs in the past twelve months up to May, accompanied by planned capital investments of nearly $50 billion. The latest wave of investment is not exclusively focused on electric vehicle production but extends to aerospace and defence, artificial intelligence infrastructure, energy facilities, and pharmaceuticals.
The defence industry alone accounted for approximately 40 per cent of announced manufacturing jobs last year, while AI and energy infrastructure represented a further 26 per cent. Life sciences, driven by multi-billion-dollar investments from companies such as Eli Lilly, Johnson & Johnson, Regeneron, and AbbVie, contributed 12 per cent, as pharmaceutical manufacturers expand their domestic production in response to patent expirations, demand for GLP-1 medications, and onshoring incentives. This manufacturing boom continues to benefit the Sun Belt region and the Southeast of the USA.
North Carolina led in announced manufacturing jobs, followed by Texas and California. Southern California remains the most important market in the US due to its proximity to the country's largest port complex, but the state was among the top five for new manufacturing jobs in the past twelve months to support regional growth in aerospace, defence, and advanced manufacturing. The Washington, D.C.-Maryland-Virginia market is increasingly linked to national security, data infrastructure, and defence industries. For example, Micron began producing semiconductor memory at its Manassas, Virginia facility, supported by investments of over $2 billion and the creation of more than 3,100 jobs in the automotive, defence, and aerospace sectors.
