From Boom and Pause to Balanced Growth: What’s Next for the Southeast Industrial Market
After several years defined by extremes, the Southeast industrial market is showing signs of shifting toward steadier footing in 2026. The post-pandemic boom of 2021–2022 created record construction and aggressive speculative development. That momentum slowed noticeably in 2023–2024, when rising costs, tighter financing and pockets of oversupply pushed many developers to pause and reassess.
Now, early signals point to a more balanced year ahead. Interest rate cuts are giving deals more room to work. Construction pricing has stabilized enough that owners can budget with confidence again. And projects that felt too risky during the peak of cost volatility are finding their way back into conversations. This isn’t a return to the frenzy of the early 2020s — it’s a return to fundamentals.
As I often tell clients, predictability isn’t boring. It’s what lets smart growth happen. For builders and owners across the Southeast, 2026 has the potential to be steady and sustainable, grounded in clearer market logic than what we have seen in the past few years.
People Set the Pace
One constant remains: people drive demand. In-migration across the Southeast continues to reshape where industrial activity strengthens, and that trend is especially visible in the Carolinas.
Different parts of the Carolinas are moving at different speeds, but population growth is the common driver. Raleigh–Durham remains supply-constrained, which keeps demand steady and encourages small-bay development. Charlotte is finding its footing again as capital flows back into the market. Charleston and the Upstate have eased off an intense construction cycle, yet long-term population trends continue to support a stable level of absorption. Meanwhile, Greensboro and the broader Triad are gaining traction thanks to recent economic development wins and more competitive lease rates.
Outside the Carolinas, markets across Florida, Texas and Tennessee are experiencing their own population-driven momentum. The common thread is clear. Growth is strongest where people and jobs are headed. Population movement remains one of the most reliable indicators of where industrial investment will take shape next.
Bulk Is Back on the Table
Population isn’t the only force shaping the coming year. The mix of industrial products is also evolving. After several years dominated by small-bay developments, the pendulum is beginning to shift back toward select bulk facilities.
During the 2021–2022 boom, large-format cross-dock buildings were everywhere. That pipeline slowed significantly in 2023–2025 as developers focused on smaller, more flexible footprints. Today, vacancy patterns suggest the market may have overcorrected. In some areas, there is more small-bay product than demand calls for — and not enough bulk.
For the first time in a few years, developers are once again underwriting larger facilities. This isn’t a repeat of the mega-facility rush, but it is an early sign that demand for regional distribution centers is returning in markets with the right fundamentals.
Retailers Rewrite the Playbook
Another major trend shaping 2026 is the rapid evolution of retailer logistics. The shift from two-day delivery to same-day — and in some areas, same-hour — is rewriting what it means to be close to the customer.
To reach customers faster, many retailers are adopting a dual-structure approach. Smaller infill nodes serve fast-moving SKUs near population centers, while larger buffer facilities are located on the outskirts of metro areas for support. Continued expansion into grocery, pharmacy and other high-turnover categories is also increasing the need for cold storage and specialty space.
These changes are already influencing vacancy. Retailers are reoccupying older buildings, retrofitting outdated assets and absorbing facilities that previously sat idle. Quietly, these moves are tightening rates and reshaping what types of facilities are viable.
For construction teams, this shift requires agility — especially around site selection, sequencing and understanding how a facility fits into a rapidly evolving distribution network.
Redevelopment Takes Center Stage
With limited land remaining near many population centers, redevelopment is becoming a compelling strategy for securing high-demand locations. We’re seeing more projects where outdated office, manufacturing or logistics buildings are being demolished and rebuilt to meet today’s industrial needs.
Redevelopment brings complexity, including tight sites, tougher zoning paths and longer entitlement processes, but the payoff is location. For many owners, the advantages of being close to labor and transportation outweigh the hurdles. As a result, redevelopment is becoming a more meaningful contributor to the industrial pipeline, particularly in the Carolinas’ tighter corridors.
Deals Pencil Again
One of the clearest signs of momentum returning to the market is the shift in financial conditions. Rate cuts have added meaningful breathing room to pro formas, and steadier construction pricing has given owners greater confidence in long-term cost planning. After several years of rapid swings in material and labor costs, this predictability is helping reduce perceived risk and reopen conversations that were previously stalled.
As a result, projects that didn’t pencil 12 to 18 months ago are resurfacing. Some paused because capital was too expensive, while others were sidelined by uncertainty around commodity pricing or questions about leasing velocity. Today, many of those same projects are being reevaluated under more manageable assumptions.
Developers who pulled back in 2023 and early 2024 are now revisiting sites, refreshing financial models and exploring opportunities for 2026 starts. This isn’t a flood of new activity, but it is a meaningful shift: confidence is returning to the underwriting process. With clearer inputs and more stable conditions, owners have a better foundation for making decisions — and that’s bringing real momentum back into the market.
Manufacturing Gains Ground
Manufacturing is another area where momentum is building. The ongoing push to reshore production is bringing new interest in facilities that can support higher power requirements, specialized equipment and more complex operational flows than traditional warehouse projects. These users often need customized footprints, which is why build-to-suit activity is gaining traction heading into 2026.
While logistics projects remain largely developer-driven in the near term, manufacturers are increasingly prioritizing control, reliability and long-term value — factors that make purpose-built facilities more attractive than adapting existing space. In several Southeast markets, this shift is already influencing site selection conversations as users look for locations that can support heavier infrastructure and access to skilled labor.
This momentum is likely to continue as companies evaluate how their facilities can better support modern production demands and reduce dependency on extended global supply chains.
Stability Is Opening the Door to Smarter Growth
After years of turbulence, the Southeast industrial market is settling into a healthier rhythm. Population trends and strategic capital are driving steady demand, while redevelopment and build-to-suit work are reshaping the opportunities emerging across the region.
Stability isn’t a slowdown. A steady market gives owners, developers and builders the space to make better decisions and plan with intention. That alone is a welcome change — and a strong foundation for the year ahead.After several years defined by extremes, the Southeast industrial market is showing signs of shifting toward steadier footing in 2026. The post-pandemic boom of 2021–2022 created record construction and aggressive speculative development. That momentum slowed noticeably in 2023–2024, when rising costs, tighter financing and pockets of oversupply pushed many developers to pause and reassess.
Now, early signals point to a more balanced year ahead. Interest rate cuts are giving deals more room to work. Construction pricing has stabilized enough that owners can budget with confidence again. And projects that felt too risky during the peak of cost volatility are finding their way back into conversations. This isn’t a return to the frenzy of the early 2020s — it’s a return to fundamentals.
As I often tell clients, predictability isn’t boring. It’s what lets smart growth happen. For builders and owners across the Southeast, 2026 has the potential to be steady and sustainable, grounded in clearer market logic than what we have seen in the past few years.
About the Author – Kirk Matthews, PE, Vice President of Frampton Construction Company, is based in the company’s Charlotte office. A licensed professional engineer in North Carolina, Matthews holds a Bachelor of Science in civil engineering from the University of North Carolina at Charlotte. He is also a LEED-accredited professional and OSHA 30-certified.
