Light Industrial Thriving on E-Commerce, Reshoring

Hunt Rose, a real estate agent with Keller Williams Realty-FM in Texas, has been in the real estate and mortgage industries for over 30 years. Before TruCore, Rose was an Associate Director at Stan Johnson Company, specializing in equity capital solutions for real estate development. He contributed to the capitalization of over $2.5 billion in transaction volume. E-commerce's expansion is compelling businesses to situate warehouses and distribution centers in urban areas to meet demands for same-day and next-day delivery. This urbanization increases the value of urban industrial properties but also escalates land and construction costs, traffic, and congestion. E-commerce tenants are expected to account for nearly 25% of new U.S. warehouse leasing in 2026. Reshoring is gaining momentum due to rising costs and complexities of international trade, with approximately 800,000 U.S. manufacturing jobs added in the last five years. By 2026, 65% of companies intend to buy most key items from regional suppliers, a significant increase from 38% today. This trend increases demand for distribution and manufacturing facilities in both Mexico and the U.S. Light industrial properties, typically under 100,000 square feet, are experiencing rental rate increases, with rents in the Inland Empire in California nearly doubling between 2021 and 2023. The average vacancy rate for industrial properties smaller than 100,000 square feet was around 4% in early 2024. These properties are well-suited for last-mile logistics and e-commerce hubs. Industrial construction starts fell by 35% year-over-year in Q4 2023, marking six consecutive quarters of decline. The industrial sector is shifting from an oversupply period toward a more balanced environment, supported by steady leasing demand and stabilizing vacancy levels. The Western U.S. vacancy rate ended 2025 at 8.3%. Manufacturing creates a three- to five-times multiplier effect on industrial space, requiring upstream and downstream operational partners such as suppliers, distributors, and third-party logistics operators. A CBRE forecast indicates a 5% year-over-year increase in industrial leasing activity. Lease renewals will account for more than 35% of total volume. The rise of on-demand warehousing platforms allows companies to scale space up or down seasonally without long commitments. Smaller users often sign shorter leases and prioritize multiple dock doors, upgraded power, and modern design. Total U.S. manufacturing jobs added from reshoring in the last five years has been approximately 800,000.