The Industrial Market is in Growth Mode
Despite geopolitical and economic headwinds, the Orange County industrial market like the national industrial sector as a whole, continues to build momentum. In the case of Orange County, manufacturers, distributors and pharmaceutical firms continue to study the market and plan investment in existing and new facilities in the county.
Conor Eckert, President and CEO of The Orange County Partnership, said, "What we're seeing in Orange County reflects what's happening nationally, but with some unique advantages. Demand remains strongest for modern, development-ready sites where companies can move quickly with confidence. Businesses today are making long-term investments, and they're prioritizing locations with strong infrastructure, access to workforce, and a predictable development process. Orange County continues to check those boxes, which is why our pipeline of manufacturing, pharmaceutical, food production, and distribution projects remains active.”
In its recently released report on the national industrial real estate sector, commercial brokerage firm Cushman & Wakefield stated: “The industrial market is in growth mode. Despite near-term macroeconomic risks, tenant demand keeps building, leasing remains healthy, and development is disciplined. At the halfway point of 2026, net absorption is on pace for its strongest year since 2023.”
Cushman & Wakefield reported that industrial real estate space demand is firming up and the overall vacancy rate (6.9%) is improving after bottoming out last year. In the second quarter, rents rose nearly 3% in the second quarter as compared to 12 months earlier. In the second quarter, 67% of the 83 industrial markets tracked by Cushman & Wakefield Research posted annual positive rent growth, up from 58% at the end of 2025. Over the past five years, average U.S. asking rents have increased 47%, with 12 markets posting gains above 60%.
In terms of new construction, while C&W termed second quarter deliveries as modest, they were up 8.3% in the second quarter. The construction pipeline rose for the fourth straight quarter, according to the report, to 305 million square feet at the end of the second quarter of 2026, up 18% year-over-year.
Stronger leasing and stabilizing vacancy rates have begun to restore developer confidence, driving an 11% rise in speculative construction as compared to the first quarter of this year, C&W stated in the report.
Industrial Outlook
In terms of where the market is heading, Cushman & Wakefield stated: “Modern facilities continue to outperform. Large occupiers continue to consolidate and upgrade their footprints, favoring modern, automation-ready facilities. Companies are also moving beyond traditional ‘just in time’ supply chains toward more resilient models that offer optionality and mitigate cost and disruption risk.”
The report concluded that market conditions will continue to improve. “Vacancy is expected to tighten further. The national vacancy rate should decline modestly in the second half as demand continues to outpace new supply. Although the development pipeline has risen steadily over the past year, it remains disciplined; over one-third of space under construction is BTS (build-to-suit), limiting the risk of speculative oversupply.”
