Warehouses and Distribution Centers Enter a New Cycle
The U.S. warehouse and distribution market is moving into a recalibration phase after several years of rapid expansion. New supply delivered nationwide is reshaping leasing dynamics, creating short-term opportunities for occupiers while reinforcing the long-term importance of strategically located logistics hubs, particularly along the U.S.–Mexico border.
Is the U.S. Industrial Real Estate Market Stabilizing in 2026?
Industry forecasts from CBRE suggest that industrial vacancy across the U.S. will continue to rise into early 2026 before stabilizing around midyear. By the end of 2025, vacancy hovered near 7%, reflecting an abundance of available space, especially in older warehouse facilities that no longer meet modern logistics standards.
This influx of available space has shifted negotiating power toward tenants. Companies seeking warehouse or distribution space are finding greater flexibility in lease terms, with landlords more willing to offer concessions to secure commitments. The shift is most pronounced in aging properties, where vacancy rates have climbed sharply as tenants reassess operational efficiency, automation potential, and location advantages.
Why is There a “Flight to Quality” in Modern Logistics Hubs?
At the same time, not all warehouse space is being treated equally. A clear divide is emerging between old facilities and modern logistics buildings. Many occupiers are consolidating or relocating operations into newer properties with higher clear heights, improved truck courts, energy-efficient systems, and proximity to key transportation routes. This “flight to quality” is leaving older inventory behind, while sustaining demand for newly built, well-located assets.
Despite softer conditions in parts of the market, the fundamental demand drivers for logistics real estate remain intact. E-commerce continues to gain share of total retail sales, reinforcing the need for distribution centers capable of handling high volumes, fast fulfillment, and last-mile delivery. In parallel, manufacturers and retailers are increasingly relying on third-party logistics providers to manage inventory and transportation more flexibly, further supporting demand for scalable warehouse space.
These trends are particularly relevant in regions that sit at the crossroads of domestic distribution and international trade.
Paso del Norte: Where Trade and Logistics Converge
The Paso del Norte region, anchored by El Paso and its deep commercial ties with Ciudad Juárez and Southern New Mexico, has emerged as one of those strategic nodes. The area’s role in U.S.–Mexico trade, combined with nearshoring activity across northern Mexico, has sustained strong interest in industrial real estate even as national conditions soften.
Recent market activity shows that the El Paso area has absorbed more than 2 million square feet of industrial space by the third quarter of 2025, prompting continued development of modern warehouses and distribution centers. New projects are increasingly designed around cross-border efficiency, featuring layouts optimized for high truck volumes, customs-related logistics, and rapid movement of goods between manufacturing plants in Mexico and consumers across the U.S.
Unlike some inland markets facing oversupply, Paso del Norte continues to attract occupiers seeking large, high-quality spaces near ports of entry. For manufacturers, this translates into shorter supply chains and improved responsiveness. For investors, it signals a market where demand is closely tied to structural trade flows rather than short-term speculation.
Markets like the Paso del Norte region stand out because they combine near-term availability with durable demand drivers linked to cross-border trade, e-commerce, and logistics outsourcing.
While vacancy may rise nationally before stabilizing, the underlying story in border regions is one of transformation rather than contraction. Modern warehouses and distribution centers that align with today’s logistics needs—especially those supporting U.S.–Mexico supply chains—are likely to remain central to industrial real estate strategies in the years ahead.
If you are looking for a warehouse, contact our team of experts at Tecma today. We offer modern facilities in high-demand areas to suit your logistics needs.
