The industrial market is moving into a new chapter as supply chains shift, tenant needs change, and development pipelines reset. After several years of rapid growth, many users are taking a closer look at how and where they operate. To get a clearer read on what is driving the next wave of activity, I sat down with my colleague Craig Hurvitz, Director, National Industrial Research at Colliers. In my role leading Agency Leasing, I collaborate with teams across multiple service lines to anticipate what is coming and guide clients through it. Craig brings a practical, data-driven perspective to the conversation, and this Q&A breaks down where we are seeing momentum build.

Matt: How are tenant location strategies evolving as supply chains become more regionalized and reshoring continues?

Craig: Tenant location strategies are shifting from a single, coast-to-coast hub model to a more regionalized approach. Instead of relying on a single fulfillment center near a major port, many tenants now use multiple, smaller regional hubs to shorten lead times and reduce disruption risk. Third-party logistics providers are playing a larger role by giving tenants a scalable way to build out regional networks, which is driving demand for cross-dock, sortation, and last-mile facilities.

Reshoring and nearshoring are also driving demand inland and along border corridors, boosting manufacturing adjacent industrial needs, especially for advanced manufacturing and logistics. More freight is moving by truck and rail, which is strengthening activity in Texas, the Southwest, and the Midwest.

Matt: It sounds like these shifts are pushing more activity inland than before. Are tenants prioritizing speed, resilience, or cost when they rethink their networks?

Craig: Most are balancing all three, but resilience and speed are leading the conversation. Companies want networks that can withstand disruption while keeping delivery timelines competitive, and regional hubs give them more control and flexibility.

Matt: How are interest rates, construction costs, and economic uncertainty shaping leasing activity and development pipelines?

Craig: Higher interest rates and uncertainty around construction costs are slowing new development and pushing more users into existing space. Elevated debt costs make new projects harder to pencil, especially speculative big box. Developers need higher rents to justify new projects, but tenants often resist those rent increases. As a result, speculative construction starts have fallen sharply, and pipelines have thinned, with demand shifting toward second-generation or recently delivered vacant space. This pullback in development is helping bring balance to the industrial market following more than three years of excess new supply and climbing vacancy rates.

Matt: Which U.S. regions or submarkets are showing the most momentum right now, and what’s driving that demand?

Craig: Midwest markets are leading the rebalancing phase of the industrial cycle. They avoided the overbuilding seen in many Southern and Western markets, so vacancies have stayed lower. Leasing and absorption have been stronger as well, supported by the region’s central location, strong rail and highway access, and rising demand for inland logistics tied to supply chain shifts and reshoring activity driven in part by the 2022 CHIPS Act.

Texas markets, especially Houston and Dallas Fort Worth, have also regained momentum. High tech manufacturing growth and its supplier network, Port Houston’s expansion, population gains, strong consumer demand, and government incentives are fueling activity. Even with DFW’s record speculative deliveries, demand has held up and vacancy is beginning to stabilize.

Matt: What are some of the biggest challenges and advantages you see in industrial leasing today, given current shifts in supply, demand, and tenant requirements?

Craig: Industrial tenants increasingly need higher power capacity, but existing infrastructure is falling short. Many face multi-year utility lead times, outdated systems, and limited available power. Economic uncertainty, unclear trade policies, and shifting freight volumes are slowing tenant decision making. Site selection timelines have stretched, and many occupiers are choosing renewals while they wait for more stability.

In oversupplied markets, competition is lengthening lease-up times for new products. Tenants have more negotiating power in certain size ranges, prompting landlords to offer concessions or lower rents. After leases are signed, occupiers still face higher build-out costs, costly power upgrades, and rising insurance and operating expenses.

In closing

The conversation makes it clear that the industrial market is still full of opportunity, even as it moves through a period of adjustment. Tenant needs are shifting, development activity is resetting, and certain regions are gaining momentum as supply chains continue to evolve. The overall tone is a blend of caution and confidence. Users are taking more time to make decisions, but the fundamentals behind long-term demand remain strong. Power capacity, operational flexibility, and the pace of leasing in key markets will be important indicators to watch. Teams that stay ahead of these changes will be well-positioned for what comes next.