The U.S. industrial construction pipeline grew to 317 million square feet in the third quarter, its highest level since early 2024, and developers are building big again. JLL’s Industrial Market Dynamics report for the quarter, released Oct. 20, counted 33 speculative buildings of 1 million square feet or more under construction. In the second quarter there were 18.
The total is up 28.7% from a year earlier and 14.8% from the prior quarter, according to ENR’s breakdown of the JLL data. JLL tracks a national industrial inventory of 16.3 billion square feet.
Big-box industrial construction leads the rebound
The growth is concentrated at the top end. Spec projects between 750,000 and 999,999 square feet rose from 11 to 18, and the 500,000- to 749,999-square-foot class went from 23 to 40. Buildings between 100,000 and 499,999 square feet grew a more modest 15% to 17%. Small spec projects shrank: those under 100,000 square feet fell 12%, from 277 to 244.
Build-to-suit and owner-user work makes up 100.1 million square feet, or 32.4% of the pipeline, against a five-year average share of 26.8%. That’s a sign manufacturers and large occupiers, not only developers chasing tenants, are driving starts.
Leasing is keeping pace. Year-to-date absorption has already passed the full-year 2025 total, and third-quarter leasing reached about 98% of last year’s full-year volume. Third-party logistics firms took nearly 18% of it. Construction materials and building fixtures companies took 14.7%, up from 10.8% a year earlier, so the building supply chain is itself a growing tenant.
Power is the first question for industrial developers
“Power has emerged as the single most important requirement and differentiator for new industrial developments,” Jeremy Garner, a managing director at Trammell Crow Co., told ENR. Elizabeth Holder, a JLL research manager and the report’s co-author, said brokers now open with two questions: does the site have power, and how soon can it be available?
Data centers are part of the story, but JLL can’t size them yet. It only recently began tracking data center-related industrial leases, and it sees that activity rising in Dallas-Fort Worth, Columbus, Ohio, and the Washington-Baltimore corridor.
Houston has a clean example. Applied Optoelectronics, which makes optical networking gear for AI data centers, leased all 153,928 square feet of Building 3 at Trammell Crow’s Blue Ridge Commerce Center in February. It bought the building for $26.8 million in September, has a $9 million interior buildout under way on 72,610 square feet and plans about 388,000 square feet of manufacturing space in two buildings in Pearland, Texas.
What the warehouse construction recovery means for builders
Holder called it “certainly a recovery” but said developers are more disciplined than in the pandemic cycle, and she sees little evidence of broad overbuilding. She expects taller, more sophisticated warehouses. That’s relevant for tilt-wall and structural subs, because older Class B buildings often lack the clear heights and column spacing that automated storage and retrieval systems need. The replacement stock gets built new.
The signals aren’t uniform. ConstructConnect’s October reading showed industrial as the only category to shrink, and planning data and square footage under way measure different stages of a job. The number to watch next is deliveries. If those 33 million-square-foot spec boxes finish into 2027 while logistics and materials tenants keep signing, Holder’s discipline argument holds. If leasing cools first, they become next year’s vacancy story.