Industrial Construction Starts Drop as 2026 Begins

Industrial construction starts lost considerable momentum heading into 2026 after a volatile but generally elevated run through much of 2025, according to Yardi Matrix.

Activity strengthened through spring and summer last year, rising from 21 million square feet in May to 29.7 million in July and 29.4 million in August. The upward trend culminated in October, when developers broke ground on approximately 35.4 million square feet—the highest monthly total in the period and a 24 percent year-over-year increase.

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The fourth quarter marked a clear reversal. Starts declined to less than 20.3 million square feet in November, down 18.7 percent year-over-year and fell further to 14.3 million square feet in December, a 23.8 percent annual drop. Compared with October’s peak, December activity was lower by nearly 60 percent.

Early 2026 shows sharp year-over-year declines

The first two months of 2026 indicate that activity remained subdued in the beginning of the year. January recorded 18.4 million square feet of new industrial construction starts, representing a 28.2 percent increase from December and a 13.6 percent decline compared to January 2025. February continued in a similar streak, with industrial construction starts totaling just 8.3 million square feet—a 62.2 percent decrease year-over-year.

On a two-month basis, January and February 2026 registered a combined 26.7 million square feet in industrial construction starts, compared with about 43.2 million square feet during the same period in 2025, representing a decline of approximately 38 percent.

—Posted on March 25, 2026