At first glance, industrial warehouses appear to have taken a back seat to the high-powered data centers sprouting up across the nation to serve artificial intelligence. But a buying spree by a major warehouse investor spotlights the standout property areas boosting a nationwide rebound.
Clarion Partners has shelled out $2 billion over the past year to snap up the types of properties that are supporting the industrial recovery: large, new or fully leased assets near the top-performing U.S. ports.
Last month, the New York City-based company paid $592 million for a seven-property portfolio totaling 2.2 million square feet in Los Angeles, the Inland Empire and Seattle that is fully leased to tenants including online retailer Amazon and electronics seller Best Buy.
"Transaction volumes are improving as investors return to the sector at scale," Clarion Managing Director and Head of U.S. Industrial Dayton Conklin told CoStar News. "The industrial sector has largely been repriced in light of increased interest rates over the past 3.5 years."
Meanwhile, Prologis, the world’s largest industrial developer and landlord, set an annual record in 2025 for warehouse leasing. Los Angeles also posted record leasing volume last year, boosted by high-profile deals from tenants like Amazon that are prioritizing larger buildings with higher ceilings, ample parking and robust power supplies.
And Brookfield Asset Management, one of the world’s biggest real estate owners, is also betting further on industrial's strength with the purchase this month of Peakstone Realty and its 76-property national portfolio in a $1.2 billion deal.
Even with this investment, the rebound of industrial property is still uneven. The nationwide vacancy rate is at its highest point in more than a decade, and it is expected to inch up further this year before coming back down, according to CoStar research.
Still, the nation's pool of logistics properties ended 2025 with strong gains in demand after sluggishness for two-thirds of the year, according to Juan Arias, CoStar’s national director of industrial analytics.
“Improved customer sentiment, together with better-than-expected market conditions, reinforces our view that vacancy has peaked and rents are beginning to inflect across many markets,” Prologis Chief Executive Officer Dan Letter told analysts last month.
Clarion buys in to rebound
After a long pause, institutional capital is moving back into industrial real estate — and it’s doing so selectively, favoring modern logistics assets in markets where leasing has stabilized and tenant demand looks durable.
Industrial property sales volume has climbed 11% in the past year, according to CoStar data, while pricing is up by 4% when compared with 2024 levels.
In addition to Clarion's $2 billion buying spree, the firm has launched about 5.5 million square feet of new high-end development with project costs approaching $1 billion across the U.S. and Europe.
Even with softer national conditions, Clarion is targeting markets it views as long-term winners, including dense coastal markets where demand drivers range from e-commerce to advanced manufacturing and last-mile distribution.
"Leasing activity picked up broadly in the second half of 2025 across a range of building sizes and markets," Dayton Conklin, Clarion's managing director and head of U.S. industrial, told CoStar News. Demand, however, is concentrated in the newest properties with modern fixtures.
Among Clarion’s recent U.S. deals is a $72 million acquisition of four such industrial buildings totaling about 419,000 square feet in Phoenix’s Southwest Valley from Kohlberg Kravis Roberts, and a $43 million purchase from Barings of a fully leased 110,000-square-foot building in San Jose, California.
Winning industrial locations
Clarion's outlook is that the industrial rebound indeed taking hold, but not in an even fashion.
The geography of demand is shifting with population and employment growth. Clarion said leasing has been more consistent in the U.S. Southeast and Southwest in recent months.
Other institutional buyers are making similar moves in logistics-heavy corridors. In Texas, Blackstone agreed to acquire a 95% stake in a 6 million-square-foot industrial portfolio developed by Crow Holdings for $718 million in 2025; and Ares, which bought a 1 million-square-foot portfolio in Houston in late 2025.
In Houston, leasing volume is running more than 60% above pre‑pandemic levels, big‑box inventory has grown over 30% in five years to meet large‑tenant demand, and population growth of 470,000 new residents in the past three years continues to reinforce the metropolitan area’s role as a major logistics hub, according to CoStar data.
Phoenix continues to outperform many large U.S. markets by pairing one of the nation’s strongest totals for net absorption, or move-ins compared to move-outs, at 15.3 million square feet in 2025. The area's had steady demand from logistics, retail and advanced manufacturing users, even as vacancy remains elevated after a construction boom.
Clarion framed its capital deployment as consistent over decades, even as e-commerce and supply chain changes keep reshaping how tenants use space.
"Our approach to location selection has been largely consistent over the past 20-plus years. Focus on infill locations near large and growing population centers, markets that benefit from significant logistics infrastructure and areas that can serve both local and regional markets," Conklin said.
While Clarion isn’t active in data centers, Conklin said the AI boom is still rippling through the warehouse and logistics market.
“As land and existing warehouses get redeveloped for data centers and advanced manufacturing, it naturally tightens the supply of traditional warehouse space, which should support pricing over time,” he said.
That shift is already pushing rents higher in markets tied to data centers and advanced manufacturing, while new manufacturing facilities are also creating longer‑term demand for distribution space to handle both inbound materials and outbound products.
At the same time, Conklin noted that companies supporting data center development, from racking and rigging firms to hardware and maintenance providers, are becoming a growing and increasingly important source of warehouse leasing demand.
Newer warehouses are widening their lead over older space as tenants prioritize efficiency and long-term operating costs.
Renters seek efficient building flow, reliable power
"Tenants are focused on efficiency in various forms: location, access to infrastructure and labor, movement of goods to and through the building and reliability and cost of power," Payson MacWilliam, managing director at Clarion, told CoStar News. "Because of the significant investment that many tenants make into their buildings, they prefer properties that meet both current and anticipated future needs."
E-commerce giant Amazon is just one of the tenants rethinking automation within its warehouses. The retailer has deployed 1 million robots in warehouse facilities and fulfillment centers across the globe, cutting “travel time” across warehouses by 10% and allowing faster delivery to customers at lower cost.
Clarion has also seen increasing tenant demand for very large blocks of space, especially in California's Inland Empire. Tenants have used the past few years to right-size their industrial footprint following rapid expansion during the pandemic period and are now growing based on real-time space needs, MacWilliam said.
"This recent increase in leasing activity has been led by larger tenants seeking larger spaces, which is a good sign for the market as smaller tenants will likely follow suit," MacWilliam said, adding that recent deals suggest "tenants have gotten more comfortable with the potential impact of tariffs."
Clarion's view is that investment and sales activity will increasingly follow leasing, especially if tenant decision-making keeps firming up after the uncertainty of the past few years.
"The pickup in tenant activity in the second half of 2025 is an encouraging sign for the market going into 2026," Conklin said, adding that tenants have used the past few years to right-size and are now growing based on "real-time space needs."