Survived 2025… Now What?

A General Contractor’s Perspective on the Industrial Market

ARTICLE SOURCE: Chris Hilgeman, Senior Vice President

Atlanta, GA – February 4, 2026 — With 2025 behind us, industrial and warehouse developers emerged from a year that marked a continued transition from post-pandemic acceleration to a more disciplined, normalized pace of growth. The year was defined by elevated interest rates, cautious capital deployment, and ongoing uncertainty surrounding trade policy and tariffs. Despite these headwinds, the industrial sector proved resilient and steady. Long-term demand drivers, infrastructure investment, and logistics-focused regional strength, particularly across the Southeast, continued to support the market.

Rather than signaling contraction, 2025 represented a necessary recalibration. After several years of historic expansion, the industrial market spent the year resetting fundamentals and positioning itself for the next cycle of sustainable growth.

Market Conditions That Shape Industrial Demand

Demand, while still present, became more deliberate. JLL reported that net absorption fell to roughly 15 million square feet in Q2 2025, one of the weakest quarters in over ten years, influenced by delayed occupancies and several large tenant bankruptcies. By the second half of the year, conditions stabilized. Colliers noted that net absorption rebounded to approximately 60 million square feet in Q3, signaling that recently delivered space was being backfilled.

Developers responded quickly. Rising vacancy levels and tighter capital markets led to a sharp slowdown in 2025 new construction starts. Colliers reported that the industrial development pipeline contracted to approximately 270 million square feet under construction by late 2025, among the lowest levels seen in years. This pullback helped curb further oversupply and laid the stage for a healthier supply-demand balance moving forward.

What Tenants are Prioritizing and How it Impacts Construction

Across major markets regionally, users prioritized well-located, functional assets tied to logistics, manufacturing, and port or population-driven distribution networks. Power-ready logistics facilities, once a competitive advantage, are now essential. Automation, fleet electrification, and cold chain operations require reliable utility infrastructure which places functional pressure on underpowered facilities.

Manufacturing-adjacent distribution is also expanding, driven by reshoring strategies. Demand for these facilities centers around proximity to production, dependable power and transportation access with designs capable of supporting higher throughput than traditional warehouse space.

Our Role in Shaping the Future of Industrial Development

As the industrial market continues to evolve, Evans General Contractors remains committed to being a strategic partner by aligning long-term business goals and operational performance with market readiness. Across every project, we bring deep expertise in distribution and logistics, and a forward-thinking approach that integrates:

• Digitalization: We help clients future-proof their facilities by incorporating smart technologies such as Virtual Design & Construction (VDC) and Building Information Modeling (BIM), data-driven systems, and connected infrastructure that enhance operational visibility and efficiency.
  
  
• Automation & Robotics Integration: From AS/RS systems, AMRs and AGVs to conveyor and sortation integration, we support the design and construction of facilities that meet the demands of modern supply chains and labor optimization.
  
  
• Consumer Driven Flexibility: As e-commerce and fulfillment expectations shift, we guide clients in developing flexible, scalable spaces that respond to changing market dynamics and customer needs.
  
  
• Material & Lead-Time Intelligence: We provide real-time insight in steel package timing, concrete availability, switchgear and transformer lead time, as well as power infrastructure to align construction schedules.

Looking Ahead: Developer Expectations for 2026

As the industry enters 2026, developers remain cautiously optimistic. Build-to-suit projects continue to dominate near-term activity, particularly in port-adjacent, manufacturing, and high-growth population corridors. Capital deployment remains conservative, with developers waiting for clearer confirmation of interest rate reductions before committing to new speculative starts. The coming year shows several construction-side indicators that point to strengthening conditions:

• Speculative construction returns gradually. While there are some pockets of speculative demand, most activity is projected to return in late Q2 as financing conditions improve.
• Absorption accelerates mid‑year, especially for automation‑ready and power‑intensive facilities.
• Utility coordination becomes a critical path item where early engagement will make or break schedules.
• More complexity in projects as tenants pursue operational efficiency, sustainability, and throughput.
• Developers favor partners who can integrate design, engineering, and construction early to reduce risk.

Overall, the market appears to be entering a measured phase of growth, where projects that align with operational requirements, risk discipline, and long-term network strategy are likely to lead the way. Whether it’s a build-to-suit distribution center, a speculative logistics hub, tenant improvement, or an updated existing facility, we deliver outcomes that position our clients for success in a competitive landscape.