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Industrial construction is not growing uniformly. U.S. manufacturing construction and warehouse construction both recorded lower 2025 activity than in revised 2024 data, but the declines were much sharper in floor area than in nominal hard-cost dollars. That combination points to fewer or smaller projects, higher costs per square foot, or both. Early 2026 forecasts remain divided: most participating forecasters expect manufacturing spending to fall, while warehouse projections range from modest growth to further decline.
The direct answer: growth has become uneven, not robust across all industrial space
The phrase industrial space covers at least two large building categories that should be tracked separately: manufacturing facilities and warehouses. In the latest national figures available from Dodge Construction Network, manufacturing construction hard costs totaled $50.5 billion for the trailing 12 months ending August 2025, down 5.6% from revised 2024. Warehouse hard costs totaled $42.0 billion over the same period, down 0.4% year over year.
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Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Measured by floor area, the slowdown was more pronounced. Manufacturing construction reached 88 million square feet, down 18.9% from 108 million square feet in 2024. Warehouse construction reached 383 million square feet, down 4.2% from 399 million square feet. These figures describe U.S. activity and do not establish that every metropolitan area or industrial submarket moved in the same direction.
Therefore, the defensible answer to whether industrial construction continues robust growth is no if robust means broad, simultaneous expansion in both value and space. The evidence instead shows a market still building substantial amounts of industrial property, while the amount of new floor area has contracted and manufacturing is weaker than warehousing.
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What counts as industrial space?
Manufacturing facilities
Manufacturing space includes buildings designed for production, assembly, fabrication, processing and related plant operations. Such projects can require heavy power, specialized ventilation, loading systems, clean rooms, structural reinforcement and extensive site infrastructure. A large dollar value does not necessarily mean a large amount of floor area because a technically intensive facility can cost more per square foot than a conventional shell.
Warehouses and distribution buildings
Warehouse construction covers storage and distribution buildings, including facilities with truck docks, high-clear-height areas, material-handling systems and, in some cases, temperature control. Warehouse square footage and manufacturing square footage respond to different tenants, financing conditions and project schedules, so combining them can conceal a meaningful shift in the market.
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1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteNAIOP’s 2026 economic-impact report presents the two categories separately and uses Dodge Construction Network data. Its construction series reports hard costs rather than the complete economic cost of a project. Land, design, financing, permitting, tenant improvements, equipment and other expenses may sit outside the hard-cost total.
What the 2025 national data actually show
The following comparison uses the trailing 12-month period ending August 2025. The 2024 figures were revised in the source series, and dollar amounts are nominal current-year dollars rather than inflation-adjusted construction volume.
| Category | 2025 hard-cost value | Year-over-year change in value | 2025 floor area | Year-over-year change in floor area |
|---|---|---|---|---|
| Industrial manufacturing | $50.5 billion | Down 5.6% from revised 2024 | 88 million sq. ft. | Down 18.9% from 108 million sq. ft. |
| Warehouse | $42.0 billion | Down 0.4% from 2024 | 383 million sq. ft. | Down 4.2% from 399 million sq. ft. |
Manufacturing shows the clearest contraction. Its floor area fell almost one-fifth, while its nominal hard-cost value fell less than 6%. Warehouse activity was comparatively stable in dollars, but its floor area still declined. Neither pattern supports a simple claim that more industrial space was being added than the year before.
Why spending and square footage tell different stories
Hard costs are not a volume measure
A nominal dollar total combines the amount of work with the prices paid for labor, materials, equipment and subcontracted scopes. If prices rise, a project portfolio can have a higher value even when it contains fewer square feet. Conversely, a decline in value can understate the reduction in physical construction if costs are falling or if projects are being redesigned.
The 2025 figures illustrate this issue. Manufacturing square footage dropped 18.9%, but hard-cost value dropped 5.6%. Warehouse square footage dropped 4.2%, while hard-cost value declined only 0.4%. The gap means the value of construction per square foot likely increased or that the mix shifted toward more expensive buildings, although the cited series does not provide a direct cost-per-square-foot calculation or explain the project mix.
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Hard costs are not total project investment
Hard-cost data should not be treated as the total amount developers, manufacturers or logistics companies invested. A manufacturing project may have major machinery and process equipment that is recorded separately from building construction. A warehouse may include land acquisition, racking, automation, roads, utility upgrades and tenant work outside the reported building hard costs.
Nominal forecasts require the same caution
Forecasts stated in billions of dollars are also nominal. They are not adjusted for inflation, so a projected increase does not automatically mean more physical construction. For a true volume comparison, readers need a consistent floor-area series or an inflation-adjusted value series, plus information on project mix.
Starts, spending put in place and completed buildings are different measures
Construction starts count projects when they begin construction. Spending put in place tracks the value of work installed during a period, which can include projects that started earlier. Floor-area totals describe the physical size of projects in the series. These measures can move in opposite directions because a large project may start near the end of a period, while an older project continues generating spending.
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Dodge reported that total 2025 construction starts rose 5.4% by dollar value even as building starts fell 4.7% by square footage. Those figures cover construction starts broadly, not industrial construction alone. They show why a headline about rising starts cannot be used as proof that industrial floor area expanded. Sarah Martin, associate director of forecasting at Dodge Construction Network, said that nonbuilding construction, alongside data centers, was the primary engine of growth in 2025 and supported a 5.4% expansion in the total dollar value of starts. She also said building starts declined 4.7% in square-foot terms alongside weaker residential, manufacturing and institutional activity.
For a specific industrial market, check whether the statistic is a start, an award, a permit, spending put in place, completions or available inventory. Each answers a different timing question.
What the July 2026 forecasts imply
The American Institute of Architects’ July 2026 consensus page displays estimates from multiple participating panelists. The submissions are forecasts of construction spending put in place in billions of dollars, benchmarked to Census releases and not adjusted for inflation. Panelists may define categories differently or forecast only part of a category, so the entries should be read as a range of assumptions rather than a single industry consensus.
| Forecast example | Manufacturing, 2026 | Manufacturing, 2027 | Warehouse, 2026 | Warehouse, 2027 |
|---|---|---|---|---|
| One panel entry shown by AIA | Down 14.2% | Up 1.3% | Down 3.6% | Up 3.2% |
| Other participating panelists | Estimates differ; most reported manufacturing forecasts show declines | Not uniform across panelists | Ranges from modest growth to declines | Not uniform across panelists |
The forecast picture is consequently more cautious for manufacturing than for warehouses. A projected 2026 decline followed by a small 2027 increase would describe a possible stabilization path, not a return to the earlier peak in physical construction. Warehouse estimates that range from growth to decline indicate that assumptions about freight demand, financing, tenant commitments and project timing remain unsettled.
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Why manufacturing and warehouse trends can diverge
Manufacturing projects have longer, more specialized commitments
Manufacturing buildings often depend on a specific production decision, process layout and equipment package. Delaying one facility can remove a large amount of square footage from a year’s pipeline even when other projects continue. The national data cannot identify which industries or regions caused the decline, so it would be misleading to assign the change to one policy or product category.
Warehouse totals can remain high while new floor area falls
Warehouses are often delivered in phases and can be redesigned toward higher specifications, automation or more expensive sites. A small reduction in square footage can therefore coincide with nearly flat nominal hard costs. The data show that possibility but do not by themselves measure rents, vacancy, absorption or the amount of unused inventory.
Reshoring remains an expectation, not a completed national wave
Commercial Metals Company said in its March 2026 investor presentation that its outlook anticipated a modest warehouse rebound in 2026 and that the reshoring wave had not yet fully emerged. This is a company perspective, not an industry-wide forecast. It is useful as an example of why some market participants expect improvement while current national manufacturing figures remain weak.
How to judge whether your local industrial market is growing
National aggregates are a starting point, not a site-selection decision. A local analysis should separate manufacturing from warehouse projects and use a consistent time period. Compare both physical and financial measures so a cost increase is not mistaken for additional supply.
- Define the building category. Decide whether the analysis covers production buildings, warehouses, flex space, cold storage or another subtype. Record the definition so year-to-year comparisons remain consistent.
- Choose the timing measure. Use starts to track new commitments, permits to track approvals, spending put in place to track active work, and completions to track delivered space. Do not mix them in one trend line.
- Separate value from volume. Report dollars and square feet in different columns. Identify whether dollars are nominal or inflation-adjusted and whether they represent hard costs or total project costs.
- Check the geography. National results can hide a boom in one corridor and a contraction in another. Compare metropolitan, state or regional data with the same category definitions.
- Review the pipeline. Note projects announced, permitted, started, under construction and completed. A large announced pipeline is not equivalent to space that will be delivered.
- Test the forecast. Treat panel projections as scenarios. Compare assumptions, update dates and category definitions before using a forecast in a budget or investment decision.
What the trend means for key industry participants
Developers
Developers should underwrite manufacturing and warehouse demand separately and stress-test schedules against slower starts. A project that appears viable on nominal construction value may still produce less rentable or usable area than an earlier comparison if specifications and costs have changed. Phasing can limit exposure to an uncertain pipeline, but the appropriate structure depends on tenant commitments and local approvals.
Contractors and suppliers
Contractors should monitor the distinction between announced work and work that has actually started. The national starts data show that overall dollar growth can coexist with lower building square footage, so backlog measured only in dollars may not reveal the amount of physical work available. Bid calendars, permit activity and project-type mix provide a more complete view.
Occupiers and manufacturers
Companies planning a new facility should allow for a longer decision path when a project requires specialized utilities, equipment or process design. National decline figures do not prove that suitable local space is abundant; a region can have fewer starts and still lack buildings with the required power, clear height, loading or environmental systems.
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Public agencies and communities
Infrastructure planning should distinguish a building pipeline from completed occupancy. Utility, road and workforce programs can be timed more effectively when agencies know whether a project is proposed, permitted, under construction or operating. National spending totals alone cannot establish local tax-base, traffic or employment effects.
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The U.S. Census Bureau is the official federal source for construction-spending releases and historical data. Its data portal states that visualizations will not be updated until further notice. For current work, use the release tables or historical-data files rather than relying on an old chart whose update status is unclear.
When extracting a Census series, save the release date, category label, seasonal or annual treatment, dollar basis and revision status with the number. This prevents a revised historical value from being compared with an unrevised figure or a nominal series from being described as real growth.
A practical outlook for 2026 and beyond
The evidence supports three possible paths rather than one guaranteed outcome. In the first, manufacturing remains below its earlier floor-area level while a few high-value projects keep nominal spending from falling as quickly. In the second, warehouse starts stabilize and the modest rebound anticipated by some market participants appears in 2026. In the third, financing or tenant uncertainty delays both categories, extending the decline in square footage.
The AIA panel spread is important because it captures that uncertainty directly. Most reported manufacturing forecasts show 2026 declines, while warehouse forecasts range from modest growth to declines. A single optimistic estimate should not be presented as the market’s settled direction, and a single pessimistic estimate should not be treated as a national certainty.
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The most reliable way to track a change in trend is to watch several releases together: Dodge starts by value and square feet, NAIOP’s hard-cost and floor-area tables, Census spending data, permits and completions in the target geography, and later revisions to the forecast. Improvement is more convincing when starts, floor area and spending move upward together over successive periods.
Bottom line
Industrial construction remains a large and active part of the U.S. building market, but the latest evidence does not support a blanket claim of robust growth. Through August 2025, manufacturing and warehouse hard-cost values were both down, and floor-area declines were larger. Manufacturing faced the sharper contraction. July 2026 forecasts suggest continued weakness or uncertainty in manufacturing and a mixed warehouse outlook. The right conclusion depends on the measure, category, geography and timing window being used.
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