SECTOR FOCUS — INDUSTRIAL
The market overbuilt. Now it's sorting itself out.
We track this market closely — industrial construction is mid-correction after a boom-era overbuild, and the response to that correction is what actually matters right now.
This page reflects general industry practice and BuildIQ Advisors' professional perspective as of publication. It is not tailored to any specific project, does not constitute engagement-specific advice, and does not create an advisory relationship. Verify current codes, standards, and site-specific conditions independently before acting.
CURRENT CHALLENGES
The warehouse and industrial market is mid-correction after a boom-era overbuild.
Industrial leasing demand fell by 11.3 million square feet in the second quarter of 2025 — the first quarterly drop in 15 years — and roughly half of the warehouses built in that same quarter remain vacant. 2026 industrial deliveries are running roughly 40% below their 2023 peak, and second-quarter 2026 construction completions fell to 47.9 million square feet, the lowest quarterly total since 2016 — a direct acknowledgment that the speculative development pipeline overshot near-term demand.[1]
WHAT SHOULD BE CONSIDERED TO OVERCOME THEM
HOW IT'S ACTUALLY GETTING BUILT
A market-wide shift from speculative to build-to-suit and owner-user development
Proven and already happening at real scale
The direct industry response — developers reducing speculative activity to lower future oversupply risk. Industrial vacancy fell 20 basis points quarter-over-quarter in the second quarter of 2026 to 6.5%, the first decline since the second quarter of 2022, as speculative construction pulled back sharply. The tradeoff: build-to-suit development reduces vacancy risk for the developer, but it ties a specific project's schedule and design tightly to a single tenant's requirements and financial health — there's no diversified pool of other prospective tenants to fall back on if that one tenant's business changes before delivery, the way a speculative building, with all its own risk, at least offers. What's genuinely unsettled: whether the market has actually bottomed, as some trade coverage now claims, or whether further correction is still ahead — sources in current reporting disagree on how far along the correction actually is, and this isn't something to resolve with false confidence in either direction.[2]
WHAT WE WOULD HELP THEM NAVIGATE
- Given the shift to build-to-suit, verifying the underlying demand commitment — a signed tenant, not a speculative bet — actually exists before capital commits, in a market where roughly half of recently built warehouses sit vacant.
- Confirming this specific site's construction schedule and cost assumptions reflect the current, corrected market — tighter tenant requirements, reduced speculative activity — rather than 2021–2023 boom-era assumptions that no longer hold.
- Testing lease-up timeline and rate assumptions in current underwriting against the actual pace of the market correction, rather than an optimistic pre-correction baseline.
WEEK-ONE QUESTIONS
WEEK ONE — WHAT WE'D ASK ON A PROGRAM LIKE THIS
- 01
Is this project build-to-suit against a signed tenant commitment, or speculative — and if speculative, what specifically differentiates this site from the roughly half of recently delivered warehouses sitting vacant?
- 02
What does current underwriting assume about lease-up timeline and rate, and has that been tested against the current market correction?
- 03
What's the realistic delivery timeline given reduced overall construction activity, and does the schedule assume boom-era trade availability that may no longer exist in this market?
Professional Services Disclosure
BuildIQ Advisors provides construction advisory and consulting services under signed engagement agreements, performed to the standard of care customary for the industry. We are not a licensed architecture, engineering, accounting, or law firm — advice requiring those licenses should come from one. Engagement terms govern each project.