Dallas, Houston Continue to Lead U.S. Industrial Real Estate Growth

Why It Matters

Reduced construction and tighter supply‑demand balances signal a shift from speculative overbuilding to more disciplined development, affecting investors, developers and tenants across the industrial sector.

Key Takeaways

• Construction activity 60% below 2022 peak.
• Dallas‑Fort Worth added 22.9M sq ft; pipeline 34.3M sq ft.
• Indianapolis net absorption 15.7M sq ft versus 3.9M sq ft supply.
• National new industrial space down 24% YoY to 266.5M sq ft.

Pulse Analysis

The industrial real‑estate market that surged during the pandemic is now entering a correction phase. Colliers’ latest data shows construction activity has fallen to 60% of its 2022 high, and new supply over the past four quarters dropped 24% year‑over‑year to 266.5 million sq ft. While developers scale back, demand remains resilient, with net absorption across the 25 biggest logistics hubs climbing 19% as tenants continue to seek space for e‑commerce and distribution networks.

Dallas‑Fort Worth and Houston remain the engine rooms of growth. Dallas‑Fort Worth led the nation by adding 22.9 million sq ft of warehouse space and holds the largest development pipeline at 34.3 million sq ft, underscoring the Sun Belt’s magnetic pull for logistics firms. Houston followed closely with 20.1 million sq ft of new inventory. These hubs benefit from strong freight corridors, lower land costs and a growing labor pool, making them attractive for both speculative and build‑to‑lease projects.

Midwest markets are emerging as tight‑supply outliers. Indianapolis recorded 15.7 million sq ft of net absorption while delivering only 3.9 million sq ft of new space, driving vacancy down to 7.1%—a 364‑basis‑point improvement. Similar dynamics are visible in Columbus, Phoenix and Memphis. The convergence of shrinking pipelines, improving absorption rates and stabilizing vacancies suggests a gradual return to disciplined, demand‑driven development, offering investors opportunities to target assets in markets where supply constraints are likely to support rent growth and valuation upside.