Seattle Industrial Market Report

The following reflects Seattle industrial market conditions as of Q2 2026.

MARKET DRIVERS

The Puget Sound industrial market remains soft, pressured by global trade and geopolitical uncertainty, including shipping-route disruptions that continue to affect energy, transportation, insurance, and supply chain costs. Some businesses have also shifted activity between Seattle and the Eastside, adding to regional uncertainty. Fundamentals remain tenant-favorable, with vacancy climbing to 9.5% in Q2 2026 — up from 7.0% at year-end 2023 — as new supply continues to outpace demand and leasing activity moderates. Cargo volumes, which recovered in 2024, softened again in 2025 as import demand normalized following tariff-related frontloading. Longer-term fundamentals remain supported by the region’s role as a major Pacific Rim gateway and distribution hub.

ECONOMIC OVERVIEW

Consumer prices across the Puget Sound region accelerated further in 2026. The Seattle-Tacoma-Bellevue CPI index rose 4.9% year-over-year through April, driven primarily by a 23.7% jump in energy costs; food prices increased 3.8%, and core inflation excluding food and energy also rose 3.8%. Seattle-area gasoline prices remain among the highest in the nation, averaging roughly $5.30 per gallon, while statewide gasoline averaged about $5.00 per gallon and diesel averaged $5.88 per gallon. The Seattle Office of Economic and Revenue Forecasts expects inflation to moderate over time, though the outlook remains sensitive to energy markets, federal policy, and geopolitical developments.

MARKET FUNDAMENTALS

Industrial activity across the broader region — from Thurston to Whatcom County — remains subdued and uneven. Total inventory stands at 410.9M SF across 10,319 properties, with 1,201 properties and 1,805 available spaces being marketed, totaling 34.5M SF — more available spaces than in Q1 but roughly 9.9% less total square footage than Q1’s 38.3M SF. Vacancy rose from 8.9% at year-end 2025 to 9.5% in Q2 2026. Inventory grew by 1,544,548 SF, with most 2026 deliveries concentrated in Pierce County (1.81M SF year-to-date across six projects). Construction underway declined to 1.96M SF, more than half of it in Pierce County, with no preleasing reported on any speculative space. Sale transactions rose to 102 in Q2, up from 85 in Q1, totaling $799.7M at an average of $208.53 PSF and a 6.3% cap rate, reflecting modestly improved investment activity with owner-users remaining active. Washington State employment stood at 3,655,000 in preliminary May 2026 data, down 0.21% (7,700 jobs) year-over-year; the six-county Puget Sound region lost 10,400 jobs (0.4%), with Information and Construction hit hardest.

NEAR-TERM OUTLOOK

The Federal Reserve has held its target rate at 3.50%–3.75% through four 2026 meetings, weighing above-target inflation against a stable but slowing labor market; markets expect a hold at the July 29–30 meeting, though elevated energy prices raise the odds of tightening later this year. The 10-year Treasury yield, volatile through the first half of 2026, has since climbed to roughly 4.55% on inflation concerns, strong economic data, and energy and geopolitical uncertainty. CRE lending spreads remain stable across capital sources, with debt capital generally available though underwriting continues to emphasize cash flow durability and sponsor strength. The Northwest Seaport Alliance continues to see below-trend cargo activity, with Q1 2026 container volumes down approximately 14% year-over-year amid shifting trade patterns and tariff-related uncertainty. The resulting decline in cargo throughput has softened demand growth for warehouse and distribution space regionally, though the region’s port infrastructure and long-term trade advantages continue to support the market.

Frequently Asked Questions

What is the industrial vacancy rate in Seattle for Q2 2026?

Seattle-area industrial vacancy reached 9.5% in Q2 2026, up from 8.9% at year-end 2025, according to Kidder Mathews research. Vacancy has climbed steadily since year-end 2023, when it stood at 7.0%, as new supply has continued to outpace tenant demand. Submarket vacancy ranged widely, from 1.8% in Skagit/Whatcom County to 12.7% in Pierce County, the highest in the region.

How much industrial space is available for lease in Seattle?

Approximately 34.5M SF of industrial space was being marketed for lease across 1,201 properties and 1,805 available spaces as of Q2 2026 (Data source: CoStar). This represents more individual available spaces than in Q1 2026 but roughly 9.9% less total square footage than Q1’s 38.3M SF, reflecting some absorption of larger blocks of space.

What are average industrial asking rents in Seattle right now?

The average blended industrial asking rate across the Puget Sound region was $1.06 PSF in Q2 2026, according to Kidder Mathews research. Rates vary significantly by submarket, ranging from roughly $0.76 PSF in Thurston County to $1.88 PSF on the Eastside, reflecting differences in supply, location, and tenant demand across the region.

How much industrial leasing activity occurred in Seattle during Q2 2026?

Leasing activity slowed in Q2 2026, with only two leases signed over 100,000 SF, both in the Southend submarket, and three over 50,000 SF, according to Kidder Mathews research. Notable signings included United Natural Foods’ 135,975 SF lease at the Valley Centre Building, signed after 19 months on the market, and a 104,221 SF lease at the Clarion-owned Lind Distribution Center. Most remaining activity was concentrated in smaller spaces.

What is net absorption in the Seattle industrial market, and what does it mean?

Net absorption measures the change in occupied industrial space over a given period — positive absorption means tenants are occupying more space than they’re vacating, while negative absorption means the reverse. Seattle’s industrial market posted 1.2M SF of positive net absorption year-over-year as of Q2 2026, according to Kidder Mathews research, though results varied by submarket: Southend posted negative absorption of -1,010,197 SF in Q2 alone, while the Eastside and Northend posted modest quarterly gains.

What is the industrial construction pipeline in Seattle?

Industrial space under construction totaled 1.9M SF across the Puget Sound region in Q2 2026, according to Kidder Mathews research, down from year-end 2025 levels as developers pull back amid softer market conditions. Pierce County accounted for more than half of that total, and no speculative space currently under construction has any preleasing in place.

What was the largest industrial sale in Seattle in Q2 2026?

Amazon’s acquisition of the 1,110,154 SF Ashley Furniture Industries property in Spanaway (Pierce County) from Ashley Furniture for $198.3M was among the largest industrial sales in the Puget Sound region in Q2 2026, according to Kidder Mathews research. Overall, sale transactions across the region rose to 102 in Q2, totaling $799.7M at an average of $208.53 PSF and a 6.3% average cap rate.

What was the largest industrial lease signed in Seattle in Q2 2026?

The largest publicly reported industrial lease in Q2 2026 was United Natural Foods’ 135,975 SF lease at the Valley Centre Building, signed after 19 months on the market, according to Kidder Mathews research. A 104,221 SF lease was also signed at the Clarion-owned Lind Distribution Center, though the tenant was undisclosed.

What is the outlook for the Seattle industrial market?

The Seattle industrial market is expected to remain tenant-favorable in the near term, with vacancy likely to stay elevated as new supply continues to outpace demand, according to Kidder Mathews research. The Federal Reserve is expected to hold its target rate at 3.50%–3.75% through its late-July meeting, and cargo volumes moving through the Northwest Seaport Alliance remain below trend, down roughly 14% year-over-year in Q1 2026. Longer-term fundamentals remain supported by the region’s position as a major Pacific Rim gateway and distribution hub.

Last updated: Q2 2026. Data source: Kidder Mathews Research, CoStar. Compiled by the Kidder Mathews Research Group.

2Q 2026 Seattle Industrial Market: Key Data Points

Explore our full Seattle industrial market review for deeper insights into leasing trends, sale activity, and submarket performance.

• Vacancy Reaches 9.5%: Regional industrial vacancy increased from 8.9% at year-end 2025 to 9.5% in 2Q 2026 as new deliveries continued to outpace tenant demand.
• Net Absorption Tops 1.2M SF: Year-over-year net absorption totaled 1.2M SF, demonstrating continued occupancy gains despite slower leasing activity across several submarkets.
• Inventory Surpasses 410.9M SF: Total industrial inventory across the Puget Sound region reached 410.9M SF, following approximately 1.5M SF of inventory growth during the quarter.
• Development Pipeline Continues to Slow: Industrial space under construction declined to 1.9M SF, with no speculative projects reporting meaningful preleasing activity.
• Pierce County Leads New Deliveries: Pierce County delivered 1.8M SF year-to-date, maintaining its position as the region’s most active industrial development market.
• Investment Activity Improves: Sales volume reached $799.7M across 102 transactions in 2Q 2026, with average pricing of $208.53 PSF and cap rates averaging 6.3%.

Submarket Statistics

Significant Sale Transactions Q2 2026

Significant Lease Transactions Q2 2026

Significant Under Construction