2026 Biannual Industrial Market Overview: Part Four

The industrial market’s headline rent index has been flat for eight straight quarters, but that stability is hiding a split. Mega-format lease renewal premiums just rebounded from 49.2% to 83.7% in a year, while coastal markets like the Inland Empire and Los Angeles keep correcting and Chicago and Dallas-Fort Worth sit at or near cycle highs. Check out the full insights in the 2026 Biannual Industrial Market Report.

Lease Term Compression Has Returned Both Segments to Pre-COVID Norms
For transactions of 200,000 square feet and larger, the average lease term length stood at 80.2 months in Q1 2026, nearly matching the 80.6-month pre-COVID baseline. After peaking at 89.6 months in Q1 2022, bulk terms compressed through mid-2025 before recovering to 80.8 months, suggesting the compression cycle has run its course.

Below-200,000-square-foot transactions tell a parallel story. Lease term length peaked at 66.3 months in Q2 2022 and has settled at 59.7 months, just 1.1 months below the Q1 2019 baseline, a level at which they have held for five consecutive quarters. 

Class A Transaction Size Surges to a Three-Year High While Class B/C Holds Flat

Average Class A transaction size jumped 16.2% quarter-over-quarter to 209,672 square feet in Q1 2026, the highest reading since Q4 2022 and 16.5% above the Q1 2019 baseline. The move follows five quarters of recovery from a trough of 166,145 square feet at the beginning of 2025. 

Class B/C transaction size, by contrast, has been more stable. Over the past eight quarters, the average has ranged narrowly between 55,359 and 58,747 square feet, with a standard deviation of roughly 1,200 square feet. In Q1 2026, the Class B/C average is up just 3.7% year-over-year. The large-format recovery in Q1 2026 appears concentrated in Class A buildings.

Leases Expiring Through 2028 Show the Strongest Rent Upside in New Jersey, Philadelphia, and Dallas

Roughly 31% of leased industrial square footage across major markets is scheduled to expire between Q3 2026 and Q2 2028. The Greater Los Angeles market accounts for more than a third of that near-term volume, followed by Chicago Metro at 15.4% and Atlanta at 11.0%.

The repricing opportunity, however, does not follow the volume. In the Los Angeles-Orange-Inland market, starting rents are running 2% below current in-place rents for both transaction size segments, meaning landlords face downward mark-to-market pressure at renewal. New Jersey-North and Central presents the sharpest upside: spreads of 35% for below-200,000-square-foot transactions and 42% for larger deals, followed by Philadelphia with 36% and 32%, respectively. Dallas and Atlanta each carry spreads above 20% across both segments. Chicago Metro holds significant expiration volume but limited repricing leverage, particularly for bulk deals where the spread narrows to just 8%.

Renewal Rent Increases Have Nearly Doubled Since Mid-2025 for Transactions of at Least 500,000 Square Feet, While Smaller Transactions Continue to Compress

Segmented by lease transaction size, the average increase in rent at renewal reveals three distinct trajectories. Transactions of 500,000 square feet and larger reached a peak of 147.2% above the ending rent of their prior lease in Q1 2023 before compressing to 49.2% by Q2 2025. Since then, the segment has rebounded sharply to 85.1% in Q1 2026, the only size cohort moving in that direction.
The 200,000-to-499,999-square-foot segment peaked later at 83.6% in Q3 2023 and has declined steadily to 44.1%, with no sign of stabilization. Sub-200,000-square-foot transactions peaked at 50.9% in Q4 2023 and have compressed to 26.2%, continuing a two-year decline.

Check out the full 2026 Biannual Industrial Market Report.