The U.S. warehouse construction market has been sliding since late 2023, according to a report from Interact Analysis. However, easing economic uncertainty and resilient e-commerce demand suggest a gradual turnaround in 2026, said the research firm.
The fundamental drivers of growth remain strong, but construction costs still remain at record highs. These highs are inhibiting growth by keeping developers highly selective and slowing the pace of new projects. Due to this, Interact Analysis doesn’t expect a full return to pre-COVID levels of construction until two years from now.
While warehouse construction isn’t collapsing anymore, improvement will remain slow and fragile. Interact Analysis said that uncertainty around economic conditions is easing, and its drag on warehouse construction is weakening. Deeper structural constraints, like high construction costs and tight financing conditions, are still suppressing growth. This will mean that recovering will remain limited.
The value of warehouse construction was sharply negative through 2023 and 2024 compared with 2022. That pace of decline has slowed in 2025, but the continued negative readings show that major headwinds remain.
Much of the improvement is not from new speculative builds but from previously planned projects that had been held off through late 2024 and early 2025. As warehouse operators gain clarity into their own end-markets, those projects are now moving forward.
Interact Analysis’ Q3 2025 forecast update shows a clear bottoming-out pattern. After a continued decline through mid-2024, the contraction rate has narrowed, indicating that stabilization is underway.
With high costs, speculative construction is riskier
Building and running a warehouse in the U.S. is still expensive, but Interact Analysis said cost inflation has plateaued. The New Warehouse Construction Producer Price Index remains just 1% to 2% below its all-time high, yet year-on-year growth has flattened. This means market sentiment is no longer deteriorating under rising cost inflation pressure.
For developers, the risk of high costs remains a growth inhibitor. However, it is at least stable and predictable, rather than something that could escalate overnight.
That distinction is key: today’s market conditions make speculative warehouse building much riskier. Financing remains tight, and construction costs are still near historic highs, meaning that the penalty for holding on to an empty warehouse is greater than before. This could improve if borrowing costs fall, but for now, developers will remain cautious.
The warehouse projects now moving forward are mostly from operators that actively need space, not from speculative developers chasing growth. Meanwhile, speculative capital is flowing into data centers instead, where huge amounts of development are happening to support the booming AI market.
E-commerce demand remains steady
A major reason the construction downturn has not deepened further is the resilience of e-commerce penetration, Interact Analysis said.
In the U.S., online retail remains as strong as it was at the height of the pandemic. This means American consumers are still buying online at near-record levels. Interact Analysis cited this as evidence that the slowdown in warehouse construction was a pause rather than a structural decline.
Developers temporarily stepped back as trade and economic uncertainty and costs peaked, but the underlying sources of demand never disappeared. With market pressures subsiding, the underlying demand forces are re-emerging, setting the stage for renewed growth in warehouse construction.
U.S. warehouse construction is approaching a reset
The U.S. warehouse construction market is approaching an inflection point, according to Interact Analysis. Demand is still well below its pandemic peak, but market deterioration appears to be slowing.
Construction costs and uncertainty are easing, while delayed projects are finally returning to the pipeline. Together, these shifts point toward a slow, controlled recovery rather than a rapid rebound.
However, this outlook remains contingent on a stable policy environment. Renewed trade tensions between the U.S. and China could quickly reverse recent gains, reigniting uncertainty and delaying investment decisions once again, Interact Analysis noted.
For now, the evidence is clear: the worst of the downturn is behind us, and the warehouse construction market is regaining momentum, but it remains one geopolitical shock away from another pause in progress.
About the author
Matthieu Kulezak is a senior analyst at Interact Analysis. He joined the Wellingborough, U.K.-based company as a senior analyst in the warehouse and factory construction research division.
With five years of market research experience in supply chain, industrial software, and industrial automation, Kulezak said he has developed deep understanding of industry dynamics.
Before that, Kulezak worked with the market intelligence team of a major industrial automation vendor. He holds a master’s degree in supply chain and is currently based in Germany.
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