New warehouses keep popping up. Yet vacancy is higher than it was at the 2021 peak. Some companies are giving space back, while others are grabbing giant “mega boxes.” So, are warehouses growing or shrinking?
The answer is both, which sounds like a cop-out until you look at the data. The U.S. warehouse base is still expanding. Developers added a lot of space in 2025, and the national inventory sits just over 18.0 billion square feet. But the market is also right-sizing, and a meaningful chunk of that shrinkage is concentrated in older buildings and certain oversized submarkets. Completions have fallen hard versus recent years, and the under-construction pipeline is smaller than it was at the peak.
That’s the “both things are true” reality.
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The numbers
Total U.S. industrial inventory hit 18,024,889,918 square feet by the end of 2025—call it 18.0 billion. Developers delivered about 280.4 million square feet of new supply last year. The under-construction pipeline varies depending on who’s counting: Cushman & Wakefield puts it at 268.1 million square feet, CBRE at 220.6 million. Either way, it’s down from the peak.
Vacancy sits at 7.1% (Cushman & Wakefield) or 6.7% (CBRE), depending on methodology. Different definitions, same direction: vacancy is elevated compared to the tightest point in the cycle. Net absorption in 2025 came in at 176.8 million square feet (Cushman & Wakefield) versus 149.2 million (CBRE). Methods differ, but both point to the same story, positive demand, just not enough to fully catch up to recent supply.
Warehouse employment tells part of the story too. There were 1,791,500 employees in warehousing and storage (seasonally adjusted) in December 2025, down from 1,844,000 in December 2024, but still well above the 1,283,800 from December 2019.
If you only remember one thing, make it this: the country added space, demand was positive, and vacancy stayed high because supply still ran ahead of demand.
Why “more warehouses” can coexist with “more vacancy”
The industrial market has a straightforward math problem. When deliveries exceed absorption for long enough, vacancy rises even if demand is positive. CBRE notes completions exceeded absorption for the 14th consecutive quarter as of Q4 2025, though the gap has been narrowing.
This is why you can drive past new construction and still hear about “softness.” The softness isn’t “no demand.” It’s “not enough demand to digest several years of big deliveries.”
Cushman & Wakefield’s report hints at an inflection point. Vacancy held at 7.1% for three straight quarters, paired with stronger second-half demand and slower speculative supply. Not a boom, not a collapse. More like digestion.
Where the shrinkage is happening
One of the more telling data points right now is what’s happening to older buildings. CBRE explicitly says older industrial space is being returned quickly, citing more than 100 million square feet of negative absorption in pre-2020 buildings over the past year.
This aligns with what a lot of operators see on the ground. Networks built for 2020–2022 volumes got resized. Some companies are moving from “two mediocre buildings” to “one newer building with better throughput.” Landlords of older stock are leaning into concessions—tenant improvements, free rent—to keep space filled.
So yeah, there is shrink. It’s not evenly distributed.
What’s still growing
Two patterns show up across the major reports. Big-box is looser than small-bay. Cushman & Wakefield puts vacancy at 9.8% for big-box warehouses over 300,000 square feet, versus 4.8% for smaller industrial assets. That gap matters if you’re an ecommerce brand shipping parcels and returns and you want infill space. Small-bay stays tighter.
At the same time, mega facilities are still driving leasing bursts. CBRE says facilities over 1.2 million square feet had the largest year-over-year leasing increase in Q4 2025. This sounds contradictory until you remember that a higher vacancy rate can still include high demand for a very specific type of building, newer, taller clear heights, higher power, better truck courts, automation-ready.
What it means for ecommerce brands and shippers in 2026
This is where the “growing versus shrinking” debate turns practical.
If you’re hunting for space or renegotiating, you may have leverage in older, larger boxes where vacancy is higher and tenants are upgrading out. Infill and small-bay can still be tight, so assume fewer concessions and more competition there. Be honest about your throughput curve. A lot of the right-sizing came from building networks for peak and then living with the hangover.
If you’re designing a fulfillment network, remember that high vacancy does not automatically mean “pick any building anywhere.” A smarter lens is asking which nodes reduce total delivered cost and transit time without overbuilding your fixed footprint. That usually means fewer giant facilities if your SKUs and order profiles don’t justify them, and more flexible nodes closer to demand if speed is a brand promise.
Where a 3PL like Speed Commerce can fit
In a market where some footprints are shrinking and others are upgrading, flexibility becomes the whole game. If you’re evaluating 3PLs, don’t just ask “what’s your price per order.” Ask how they handle the stuff that gets exposed when the market shifts: building age and layout (dock ratio, clear height, trailer parking), power availability and automation readiness if you’re heading that direction, how they manage capacity during promos and Q4, and whether you can expand or contract space without signing a long lease you’ll hate later.
CBRE also expects more outsourcing of distribution operations as part of the 2026 setup, and they call out 3PL activity as a meaningful share of leasing.
Summary
If you’re looking for a single-word answer, we can’t give you one. The U.S. warehouse base is still expanding in total square footage. The market is also shedding and recycling space, especially older product. Vacancy is elevated because supply outran demand for long enough, even though demand is positive. That combo is exactly what “post-boom normalization” looks like in industrial real estate.
References
Cushman & Wakefield, United States Industrial MarketBeat, Q4 2025 (PDF).
CBRE, U.S. Industrial and Logistics Figures, Q4 2025 (published January 21, 2026).
CBRE, U.S. Real Estate Market Outlook 2026: Industrial (published January 2026).
NAIOP, Industrial Space Demand Forecast, First Quarter 2025 (net absorption projections for 2025–2026).
Federal Reserve Bank of St. Louis (FRED) / U.S. Bureau of Labor Statistics, All Employees, Warehousing and Storage (CES4349300001) (series through Dec 2025).
