June 2026 Warehouse Market Trends

What’s Happening Across the Supply Chain?

Supply chains are constantly adapting to disruptions, changes in consumer demand, and shifting capacity. Here’s the executive summary on what Flexe has been tracking and helping shippers respond to over the past month.

In May, Flexe coined and applied the term Warehousing Stagflation to the state of U.S. and Canada warehousing markets. We see no reason to change that assessment today: Industrial rents dropped, only nominally (0.3%), QoQ in Q2 in the U.S. while availability (sublet + direct) increased 1.0%, continuing a trend of persistently high cost to buyers despite historic-record availability.

We’d like to show our audience a light at the end of the tunnel. The LMI may be pointing toward a change in warehousing availability, as their June publication cited the highest Warehousing Utilization inflection (69.4) since February 2023, which we cover in more detail below. In pricing, the Flexe Spot Warehousing Index has now shown 3 straight months of increases to short-term pallet storage rates. This indicates that the discount/spread for spot rates vs contract (lease) rates, for purchasing warehouse capacity, is tightening.

US Industrial Leasing Market⁽¹⁾

At a high level, the state of the US warehousing market can be visualized by tracking two numbers: Industrial Vacancy Rates and Annual Asking Rent per Square Foot, both national averages. These metrics are driven by important, underlying economic variables like trade volumes, retail inventories and sales, and industrial construction and sales, and in turn serve to indicate the overall direction of US warehousing supply & demand.

Industrial Vacancies & Rents

Summary

Market Dynamics for Fixed Space

• Industrial property sellers are finally acknowledging rents must come down in light of persistently high, record availability (9.6% nationally as of Q2 2026, a level not seen in at least ten years prior to Q1 2025). Lease rates are responding late to that signal, consistent with the tightening already showing up in the LMI and the Flexe Spot Warehousing Index.
• Overall availability is buoyed by record sublease inventory, not just direct vacancies. The 202.5M sq ft of available sublet space in Q2 would have set a new record if not for the ten consecutive record-breaking quarters that preceded it, from Q2 2023 through Q3 2025. The brief Q4-to-Q1 dip now looks like a seasonal blip rather than a real trend, which keeps the exit ramp closed for shippers and 3PLs still stuck in high-cost 5 to 10 year leases signed during Covid-era “panic leasing”.
• The market is tightening supply through limited new construction. Net deliveries totaled 94.7M sq ft in the first half of 2026, the lowest six-month total since Q2-Q3 of 2016. Since that figure includes plants, near-shoring, and data centers, logistics-specific builds (warehousing, cross-docks, cold storage) are likely at unprecedented lows. That raises real risk of an over-correction, as shippers report tightening capacity against a historically thin construction pipeline. But there’s still a large buffer to absorb first: 1.7B sq ft of industrial space sits idle today, up 650M sq ft from the Q1 2022 nadir.

Logistics Managers’ Index (LMI)⁽²⁾

Academic researchers in supply chain management build the LMI by surveying logistics leaders monthly on the 8 key measures of supply chain activity shown below. For Warehousing specifically, an industry whose costs for generations have literally been “behind closed doors”, the LMI offers a unique view into capacity, utilization, and ultimately, costs.

Summary

Market Dynamics for Flexible Space

• The Logistics Managers’ Index hit 71.1 in June, its first reading above the 70.0 “significant expansion” threshold since March 2022, driven by a sharp reversal in inventory behavior: inventory levels jumped 5.7 points month-over-month to 60.5 as retailers abandoned the lean, wait-and-see posture they’d held through spring. That build cascaded into warehousing, where utilization climbed 6.5 points to 69.4 (the highest since September 2022), prices rose 3.1 points to 73.8, and capacity flipped from mild expansion (50.5) back into contraction (47.5). Transportation utilization followed the same pattern, hitting an eight-year high of 74.7, though prices moved the other way, easing from May’s all-time record of 96.0 to a still-extreme 92.4.
• Two forces are driving the inventory build: resilient consumer spending, up 0.9% in May and ahead of forecasts, with back-to-school shopping already underway, and retailers pulling holiday and seasonal imports forward ahead of new tariffs expected in late July.
• Notably, transportation pressure in the LMI has shifted from a fuel story to a capacity story. Diesel fell nearly a dollar from its April peak through June, yet capacity has contracted for seven straight months as carriers face higher operating costs and tightening regulatory pressure. That divergence points to structural tightening, not a temporary fuel spike.

Peak Season Arrives Early Amid Tariff Uncertainty⁽³⁾

Policy, Imports, and Retail Behavior

For the second year running, peak shipping season has arrived early. NRF and Hackett Associates forecast July 2026 imports at 2.47 million TEU, a new record beating the 2.4 million TEU high from May 2022, as retailers front-load back-to-school and holiday goods ahead of new tariffs expected in August.

That’s not a one-time spike. It’s a pattern. And it changes the math on long-term footprint decisions: committing to fixed capacity means betting on where the peak lands next year, and that bet has now moved twice.

On-demand capacity sidesteps the bet entirely. Positioned near end consumers, it absorbs the wave when it comes and releases when it passes, without anyone needing to forecast the shape of a season that no longer holds still.

Transportation Costs Remain Elevated⁽⁴⁾

LMI, Fuel Costs, and Network Design

Transportation prices hit 96.0 on the LMI in May, the fastest rate of expansion ever recorded for any component of the index. They held at an extreme 92.4 in June. The proximate trigger was the Iran conflict: crude topped $110 a barrel, and national diesel peaked near $5.64 a gallon in early April, above $7 on the West Coast. By late June that shock appeared to have passed. Prices didn’t follow.

The reason is capacity, not fuel. Transportation capacity has now contracted for seven consecutive months, reaching 30.8 in June, while utilization hit an eight-year high. Employment has fallen in four of the last five months, and industry analysts point to elevated operating costs and tightening regulatory pressure on driver availability as what’s limiting carriers’ ability to grow. Compounding the crunch, renewed conflict in the Strait of Hormuz in July has started pushing oil prices back up.

Transportation is now both the largest and fastest-growing line in the logistics cost stack. That makes network geometry the highest-leverage variable a shipper has right now. But freight, warehousing, and duty rates are all repricing on separate clocks, so the optimal node count is a moving target. The real advantage belongs to networks that can re-optimize as inputs shift, not ones built for a cost structure that’s already changed.

June 2026 Regional Market Highlights⁽⁵⁾

Regional Warehousing Detail

Lehigh Valley, PA: Vacancy improved sharply on the quarter, falling 0.88 percentage points QoQ, though it remains elevated at 9.2% and up 1.63 percentage points YoY. Asking rents posted the strongest growth in this cohort at 0.41% QoQ and 5.79% YoY, but sublease availability has ballooned 238.9% YoY as the market works through negative trailing-twelve-month absorption of roughly 1.5M SF.

Indianapolis, IN: Indianapolis posted the strongest recovery in the cohort, with vacancy falling 0.78 percentage points QoQ and 2.95 percentage points YoY to 6.8% on 15.6M SF of trailing-twelve-month absorption against just 3.1M SF of deliveries. Rents accelerated 1.53% QoQ and 2.45% YoY, reinforced by a 46.5% YoY reduction in sublease space.

Kansas City, MO: Vacancy rose 0.28 percentage points QoQ and 0.64 percentage points YoY, though it remains among the tightest in the cohort at 6.1%. Rents were essentially flat at 0.14% QoQ and up 2.49% YoY, while sublease space jumped 34.6% QoQ and 14.2% YoY, a trend worth watching given the market’s otherwise low availability.

Reno, NV: Vacancy climbed another 0.68 percentage points QoQ and 2.75 percentage points YoY to 13.6%, the highest in the cohort, as trailing deliveries of 5.5M SF far exceeded 1.1M SF of absorption. Rents still managed gains of 0.75% QoQ and 2.28% YoY, though a 32.0% YoY surge in sublease availability adds further pressure.

Seattle, WA: Vacancy rose 0.43 percentage points QoQ and 1.50 percentage points YoY, crossing into double digits at 10.1% on negative trailing-twelve-month absorption. Rents maintained modest positive momentum at 0.61% QoQ and 2.63% YoY, and sublease availability contracted sharply, down 18.4% QoQ and 24.2% YoY, while a near-empty pipeline (0.5% of inventory) limits further supply-driven deterioration.

Toronto, CAN: Toronto remains far tighter than any US market in the set at 4.1% vacancy, essentially unchanged QoQ (+0.07 percentage points) and YoY (−0.08 percentage points). Market asking rents were flat, slipping 0.23% QoQ against 0.83% growth YoY to $13.29/SF, while sublease availability expanded 24.2% QoQ and 11.1% YoY as new supply continues to filter through an otherwise supply-constrained market.

(1) CoStar CRE, U.S. Census Bureau (2) FreightWaves, Inc; Logistics Managers’ Index; U.S. Energy Information Administration (3) Maersk North America Market Update — July 2026; National Retail Federation; Jones Lang LaSalle IP, Inc.; Penske Media Corporation (WWD & Women’s Wear Daily) (4) FreightWaves, Inc; The New York Times Company (5) CoStar CRE