2026 Biannual Industrial Market Overview: Part One

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.

Gateway U.S. Industrial Markets
KEY FINDINGS

U.S. Imports Post First Non-COVID Streak of Three Straight Double-Digit YoY Declines: Total goods imports peaked at $342.3 billion in March 2025 before entering a sustained contraction. China volumes were down 49.6% year-over-year in January 2026.

E-Commerce Share of Retail Sales Hit 16.9% in Q1 2026, Surpassing the Pandemic Peak: After settling in a 14% to 15% range from 2021 to 2022, the share crossed 16% in Q2 2024 and has risen steadily since. The tariff environment appears to have reinforced rather than disrupted the structural shift toward online purchasing.

Inland Empire’s Quality-Adjusted CCRI Down 31.1% from Peak; Chicago Hits New Cycle High: West Coast markets show the deepest CCRI corrections: LA MSA is off 25.7% over 12 quarters, Chicago flat, Dallas-Fort Worth down just 0.4% after five quarters, and New Jersey down only 3.8% despite an 85.6% run-up.

Renewal Rent Increases for Large-Format Leases Have Nearly Doubled Since Mid-2025: Renewal rent increases for deals of at least 500,000 square feet fell to 49.2% in Q2 2025 before rebounding to 83.7% in Q1 2026, while increases for smaller segments continued to compress.

Non-Bulk Free Rent Reaches a Cycle High as Bulk Eases from Its Q4 2025 Peak: Non-bulk free rent hit a cycle high of 4.5% of term in Q1 2026. Bulk eased to 4.8%, down from a 4.9% peak in Q4 2025, its first quarterly decline in eleven quarters. Both series remain well above the pre-pandemic range of 2.2% to 2.3%.
New Jersey and Philadelphia Carry the Strongest Near-Term Repricing Upside; Los Angeles Faces the Opposite; About 31% of leased industrial square footage expires by mid-2028. New Jersey rents run 35% to 42% above in-place for expiring leases; Greater Los Angeles, which holds over a third of near-term volume, runs 2% below.

Industrial Employment Sectors Stabilizing, but Negative Year-Over-Year Trends Persist Through May 2026

Manufacturing fell 2.5% from January 2023 through December 2025 before stabilizing in early 2026, adding approximately 25,000 jobs through May. Year-over-year losses narrowed from 1.3% in mid-2025 to 0.4% as of May 2026, suggesting the post-pandemic correction may be approaching a floor.

Transportation and warehousing peaked near 6.7 million in February 2025 and declined 2.0% through December 2025. As of May 2026, the sector remains down 0.9% year-over-year,  part of a persistent negative trend that has held since late 2024, with little indication of a near-term reversal.

China-Driven Contraction Deepens U.S. Import Decline

Total U.S. goods imports peaked at $342.3 billion in March 2025, driven by frontloading ahead of new tariffs, before entering a sustained contraction. January through March 2026 posted the first three consecutive months of double-digit year-over-year declines outside of COVID, at -18.1%, -11.9%, and -11.7%, extending a negative streak that began in August 2025. April turned positive at +9.0% year-over-year, though this largely reflects a depressed base from the April 2025 tariff shock rather than a genuine demand recovery. Absolute volumes at $300.5 billion remain well below peak.

China’s declines have run far deeper than overall goods throughout this cycle, reaching -49.6% year-over-year in January 2026 versus -18.1% for total imports. While overall volumes show early signs of base-effect normalization, China imports remained down 21.9% in April, with no comparable stabilization in sight.

Every Major Port Down Year-Over-Year Through April, with Charleston and Long Beach Leading Declines

Every major port analyzed posted year-over-year declines through April 2026, with the elevated 2025 baseline from tariff-driven frontloading weighing on comparisons on both coasts. Across six major ports analyzed combined, total TEU volume fell 4.2% year-over-year, a decline of approximately 585,000 TEUs.

Charleston led all declines at -12.7%, followed by Long Beach at -5.7% and Savannah at -5.5%. East and Gulf ports combined fell 4.5% year-over-year, modestly outpacing the West Coast’s 3.9% decline, the reverse of the dynamic that characterized much of 2024. Los Angeles was the most resilient West Coast port at -2.0% from 2025 through April, while Houston posted the smallest decline overall at -1.0%. West Coast ports held their year-over-year share of the combined volume of these ports at 48.4%, suggesting that the coast-to-coast demand shift of recent years has not meaningfully accelerated under the current tariff environment.

E-Commerce Share Hits a New High as Consumer Spending Stabilizes After Early 2025 Surge

E-commerce’s share of retail sales reached 16.9% in Q1 2026, surpassing the pandemic peak of 16.3% recorded in Q2 2020. After settling into a 14% to 15% range from 2021 to 2022, share resumed its climb in 2023, crossed 16% in Q2 2024, and has risen steadily since. The tariff environment of 2025 appears to have reinforced rather than disrupted the shift toward online purchasing.

Real retail and food services sales spiked in March and April 2025 at +2.7% and +2.6% year-over-year, the dataset’s two strongest monthly readings, as buyers pulled forward purchases ahead of anticipated price increases. Growth softened through Q4 2025, including a lone contraction in December at -0.2%. Q1 2026 stabilized between 0.8% and 1.7%, then 1.1% in April, suggesting consumer spending has held up as the pull-forward tailwind faded.

Check out the full 2026 Biannual Industrial Market Report.