Supply chains are constantly adapting to disruptions, changes in consumer demand, and shifting capacity. Here’s the executive summary on what Flexe has been tracking and helping shippers respond to over the past month.
In June, we pointed to a light at the end of the Warehousing Stagflation tunnel. That light held in July: national vacancy edged up just 2 basis points to 7.5%, industrial asking rents stayed essentially flat at $13.55 per square foot, and we’re forecasting spot warehousing prices to decline 1.2% through October. Together, these suggest some of the broad market pressure built over the past two years is beginning to ease.
That rebalancing, however, is unlikely to be uniform. LMI Warehousing Prices reached 75.5 in July even as capacity contracted for a second consecutive month. The pressure is also shifting geographically and operationally. Inventory pulled forward earlier in the year appears increasingly concentrated upstream, and inland manufacturing markets remain supported by stronger production and restocking demand. At the same time, record intermodal volumes are giving shippers another way to move freight away from congested or expensive trucking lanes. The next phase of the market may therefore be less about broad national scarcity and more about where inventory is held, where capacity is available, and how goods move between the two.
The fixed US warehousing market can be tracked using two national metrics: Industrial Vacancy Rates and Monthly Palletized Equivalent Asking Rent. Both are driven by underlying economic variables such as trade volumes, retail inventories and sales, industrial construction, and property transactions. Together they indicate the overall direction of US warehousing supply & demand.
Market Dynamics for Fixed Space
Academic researchers in supply chain management build the LMI by surveying logistics leaders monthly on the 8 key measures of supply chain activity shown below. For Warehousing specifically, an industry whose costs for generations have literally been "behind closed doors", the LMI offers a unique view into capacity, utilization, and ultimately, costs. The lease market is only now reflecting the weakness spot rates signaled last year. Spot rates fell 22% from Q3 to Q4 2025 before bottoming in December alongside LMI warehousing utilization. Because fixed leases reprice more slowly, asking rent growth has been decelerating since late 2025. That weakness may persist in the near term, consistent with CoStar’s forecast for continued downward pressure. We still expect spot rates to ease modestly into the fall as peak-season inventory sells through. Looking ahead, we expect spot rates to ease modestly into the fall as peak-season inventory sells through, a seasonal wave passing rather than the underlying turn reversing.
Market Dynamics for Flexible Space
Manufacturing, Imports, Warehouse Vacancy
Inventory remains relatively lean even as manufacturing accelerates. The U.S. business inventory-to-sales ratio fell to 1.28 in May from 1.39 a year earlier, while July’s ISM Manufacturing PMI reached 55.6, its strongest reading in more than four years, with production climbing to 58.5, backlogs rising to 55.0, and 15 of 18 manufacturing industries expanded. Most telling: ISM’s Customer Inventories Index fell to 40.7, a reading ISM itself flags as “too low”, suggesting downstream customers may need to restock as factory output grows. The July Logistics Managers Index (LMI) shows where that gap is emerging. Retailers' inventory levels swung month over month from expansion (66.0) to contraction (46.3), while wholesalers held steady at 59.0, suggesting goods pulled forward this spring remain concentrated higher in the supply chain rather than flowing through to retail.
At the same time, the import wave is moving past its peak. NRF’s August Global Port Tracker reports that retailers pulled merchandise forward ahead of tariff changes, making May, not the traditional late-summer or fall peak, the year’s busiest import month. Import volumes are expected to decline from August through November before a modest December uptick. Together, fading import frontloading and stronger domestic production point to the next replenishment wave increasingly originating within the U.S.
That could change where warehouse pressure shows up next. Several major import gateways still carry above-average vacancy, including Savannah (10.5%) and the Inland Empire Core (7.4%), compared with 6.5% nationally. Manufacturing-heavy markets like Detroit, Cleveland and Cincinnati by contrast, remain near or below 4%. Manufacturers are also taking a growing share of industrial space, accounting for more than 12% of U.S. leasing activity in the first half of 2026, up from just 7.6% in 2022 Q3. Flexe’s own Spot Warehousing Index, shows the same split: import gateways like Coastal LA, Inland Empire, and Newark are loosening into buyer’s markets, while manufacturing-heavy regions like Indianapolis and Kansas City remain tight seller’s markets. If domestic restocking accelerates, those tighter inland markets have less capacity to absorb incremental demand, even as some major import gateways retain more available space.
Diesel Costs, Transportation Capacity, and Network Design
In June, transportation pressure looked increasingly like a capacity story rather than a fuel story. July brought fuel back into the picture without easing the capacity constraint. U.S. diesel prices fell for nine consecutive weeks, reaching $4.58 per gallon on July 6, before reversing sharply and climbing to $5.35 by August 3. The reversal came as Russia halted diesel exports and renewed U.S.-Iran hostilities raised fresh concerns about petroleum flows through the Strait of Hormuz, adding pressure to an already tight global diesel market.
Capacity remains the other half of the equation. July’s Logistics Managers’ Index showed Transportation Capacity contracting for an eighth straight month in July, falling to 28.4, even as utilization retreated to 65.0 from June's eight-year high. Prices at 86.9 remain extreme by any historical standard.
For shippers, transportation costs now have two active pressure points: fuel and capacity. Neither is easily controlled, but network design is. As freight, rent, and labor costs reprice, the economics of individual nodes and lanes change with them. Networks that can adjust inventory placement and fulfillment around those changes can reduce exposure.
Rail Volumes, Trucking Capacity, and the Long-Haul Shift
Intermodal rail is having a breakout year. U.S. intermodal volume set a record for the month of July, the strongest July on record, following a record-setting June. Even so July ranked sixth among all months on record, not just past Julys, since peak-season months typically post the highest volumes overall. That July came in this strong is notable given the July 4th holiday. Through July, intermodal volume is up 3.8% year over year, the strongest year-to-date pace on record. The Association of American Railroads projects 2026 is now on pace to be the strongest year for intermodal in its history.
The strength is notable given tightening trucking economics. DAT reported that June dry-van spot linehaul rates rose 45% year over year while van freight volumes stayed roughly flat. Spot van rates also moved above contract rates for the first time since February 2022. IANA expects capacity constraints in long-haul trucking to keep supporting domestic intermodal growth.
For shippers, this makes intermodal more than an overflow option. As trucking capacity tightens and pricing power returns to carriers, rail becomes more competitive on long-haul lanes where transit requirements allow it, and record volumes suggest that shift is already underway. The bigger obstacle for many shippers is capability, not economics: without rail-served facilities or intermodal expertise, making the switch is hard. Diversifying network nodes and working with experienced intermodal transload partners can provide rail access without requiring a fully rail-served footprint.
Regional Warehousing Detail
Reno, NV: Reno carries the highest vacancy rate in the cohort at 13.4%, though it eased by 0.24 percentage points QoQ. The silver lining for shippers is price: at $9.46/SF, Reno offers West Coast adjacency at a 23% discount to the U.S. average. Flexe’s spot warehousing index is tagging Reno as a solid Buyer’s Market.
Savannah, GA: Savannah’s vacancy sits at 12.3%, flat QoQ and the second-highest in the cohort. With Global Port Tracker projecting monthly import declines through December, this availability is unlikely to absorb quickly. Asking rents of $9.37/SF, up 1.0% QoQ, make Savannah the best Buyer's Market for port-adjacent capacity in the tracked set.
Seattle, WA: Vacancy deteriorated a further 0.52 percentage points QoQ to 10.6%, deepening last quarter's move into double digits. Rents of $14.56/SF (-1.8% QoQ) remain above the U.S. average, making Seattle one of only two tracked markets holding above-average pricing against double-digit vacancy (Phoenix, at 10.6% and $13.36/SF, is the other). However, the spot market in Seattle is loosening into a Buyer’s Market.
Memphis, TN: Memphis posts the lowest asking rent in the cohort at $5.76/SF (up 0.3% QoQ), 53% below the U.S. average. On 334M SF of inventory, vacancy of 8.3% (-0.24 percentage points QoQ). The nation's air cargo hub is pricing warehouse space like a tertiary market.
Chicago, IL: The largest industrial market in North America (1.38B SF) carries 5.5% vacancy (up 0.11 percentage points QoQ), two full percentage points below the U.S. average, on rents of $10.35/SF (up 1.9% QoQ). Markets this large usually carry slack, but Chicago’s capacity remains scarce.
Kansas City, MO: Vacancy tightened 0.22 percentage points QoQ to 5.9%, second-lowest among tracked U.S. markets, while rents held at $7.41/SF (flat QoQ). The 34.6% QoQ sublease jump flagged in June appears to be getting absorbed rather than cascading into direct vacancy. As a manufacturing-heavy region, Kansas City's spot market remains a solid Sellers’s Market.
Toronto, ON: Toronto tightened 0.16 percentage points QoQ to 3.9% vacancy, matching Vancouver and remaining tighter than every U.S. market in the set. Asking rents increased 1.50% QoQ to $13.49/SF, a notable firming for a market this supply-constrained, even as new supply continues to filter through. With such low vacancy, the spot warehousing index is also pointing to a tightening Seller’s Market in Toronto.