Industrial Report: Energy Shock Shifts Site Selection
Iran-linked shipping disruption is pushing site selection back to the forefront, according to Yardi Matrix.
A new wave of geopolitical disruption is filtering directly into industrial decision-making. The May 2026 Yardi Matrix industrial report points to the Iran conflict and the effective shuttering of shipping through the Strait of Hormuz as an early driver of higher logistics costs, with ripple effects stretching well beyond maritime routing.
Before the conflict, about 20 percent of global oil supply moved through the strait, and the report describes the resulting energy shock as an unusually large disruption for the oil market. Fuel costs have climbed across gasoline, jet and maritime channels, pushing up transportation expenses at every point in the supply chain.
For occupiers, that cost pressure is likely to reset priorities that had eased as the post-pandemic supply chain stabilized. Site selection is moving back to the center of leasing decisions, with firms placing greater value on shorter delivery distances and keeping inventory closer to customers. Properties near seaports, rail nodes and highway networks, along with smaller infill facilities, stand to benefit as tenants focus on limiting miles traveled.
Rent growth holds, leasing momentum softens
Industrial rent growth remains positive at the national level, but the pricing signal is increasingly coming from new leases. In April, the U.S. average for in-place industrial rents was $9.08 per square foot, up five cents month-over-month and 5.3 percent year-over-year. The vacancy rate clocked in at 9.1 percent, up 30 basis points from a year earlier, stabilizing since the second half of last year as deliveries leveled off and demand remained steady but muted.
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Leases signed over the past 12 months averaged $9.99 per square foot, a $0.91 premium to the in-place average. That gap has narrowed in recent quarters and, in many markets, newly signed leases are now slightly below prevailing averages, signaling tenant leverage. Southern California is the clearest example—Los Angeles industrial space posted new leases priced $1.51 per square foot below the market’s in-place average, while Orange County was $0.61 below.
Industrial pipeline holds steady across major markets
On the supply side, 360.8 million square feet of industrial space were under construction nationally in April, equal to 1.7 percent of stock. Dallas remains the largest pipeline market, with 28.6 million square feet underway, or 2.7 percent of inventory. The scale is notable given recent industrial deliveries: the metro added 116.8 million square feet in 2022 and 2023 and another 51.6 million square feet in 2024 and 2025.
Investment activity has also remained steady. A total of $23.9 billion in industrial transactions were recorded through April, with properties trading at an average of $138 per square foot. Philadelphia is highlighted as a strong early-year market, supported by logistics demand in a dense population base and an efficient port. Local pricing has risen more than 150 percent from 2019 to 2026 and points to continued absorption even after significant deliveries since 2021. The report also flags EQT Real Estate’s activity in South Jersey, including a $308.7 million acquisition of the 2 million-square-foot Forest Park Corporate Center in Gloucester County.
Read the full Yardi Matrix report.
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