Industrial REITs have started 2026 with improved visibility, supported by a rebound in industrial demand during the second half of 2025. Conditions in the fourth quarter of 2025 pointed to a market that was stabilizing after an extended period of supply pressure, as leasing activity improved and vacancy stopped climbing. 

According to a report by Cushman & Wakefield (CWK Quick QuoteCWK - Free Report) , U.S. industrial vacancy held at 7.1% for a third straight quarter, while full-year net absorption reached 176.8 million square feet (msf), up 16.3% year over year. Investor focus has shifted away from peak rent growth toward the sustainability of cash flows and balance sheet strength.

Within this environment, Prologis (PLD Quick QuotePLD - Free Report) , the behemoth in the industrial REIT space, closed 2025 on solid footing, reinforcing the benefits of scale and asset quality. The company signed 57 msf feet of leases in the fourth quarter, driving period-end occupancy to 95.8%. Core FFO totaled $1.44 per share for the quarter, supported by strong lease rollovers, while net effective rent change exceeded 40%. With nearly $800 million of embedded mark-to-market rent still to be realized, Prologis enters 2026 with meaningful internal growth visibility. PLD currently carries a Zacks Rank #2 (Buy). 

Apart from Prologis, there are two other REITs — Industrial Logistics Properties Trust (ILPT Quick QuoteILPT - Free Report) and First Industrial Realty Trust, Inc. (FR Quick QuoteFR - Free Report) — which also represent compelling buying opportunities. However, prior to that, let’s discuss how the industrial real estate market has behaved in the fourth quarter and what lies ahead.

Industrial Real Estate Market Fundamentals in Q4

At the market level, industrial demand showed renewed momentum late in 2025. Per the report, fourth-quarter net absorption totaled approximately 54.5 msf, a sharp 29% improvement from the prior year quarter, and a strong two-quarter stretch of exceeding 50 msf since 2023. Vacancy moved higher only modestly on a year-over-year basis, reflecting improved alignment between tenant demand and new deliveries. Leasing activity was increasingly concentrated in inland distribution hubs such as Dallas–Fort Worth, Phoenix, and Indianapolis, underscoring ongoing shifts away from port-centric supply chains.

However, rent growth continued to cool as elevated supply worked through the system. National asking rents rose about 1.5% year over year, with more pronounced softness in the Northeast and West that had experienced outsized gains earlier in the cycle. Roughly 268 msf of industrial space remained under construction at year-end, but development activity showed signs of leveling off, with a larger share of projects tied to build-to-suit requirements.

The industrial real estate outlook points to gradual improvement rather than a rapid rebound. With development remaining disciplined and demand holding steady, vacancy is expected to stabilize before tightening over time. Structural drivers such as e-commerce, automation and reshoring continue to underpin long-term demand, setting the stage for a more selective but durable setup as investors turn their attention to individual industrial REIT stocks.

Stock Picks

Industrial Logistics Properties Trust: This REIT is focused on owning and leasing high-quality industrial and logistics properties across the United States. Its portfolio includes 411 properties with approximately 59.9 million rentable square feet in 39 states, serving a diverse base of tenants with stable lease structures. About 76% of annualized rental revenues come from investment-grade tenants (or their subsidiaries) and Hawaii land leases, highlighting the quality and geographic diversification of its assets. 

ILPT’s investment case is supported by solid fundamentals and positive leasing economics. The company’s same-property net operating income and cash-basis NOI trends demonstrate resilient cash flow generation, while disciplined capital management has improved financial flexibility. 

ILPT currently sports a Zacks Rank #1 (Strong Buy). It is slated to release its earnings on Feb. 18, after market close. You can see the complete list of today’s Zacks #1 Rank stocks here.

Industrial Logistics Properties Trust Price and EPS Surprise

Industrial Logistics Properties Trust price-eps-surprise | Industrial Logistics Properties Trust Quote

The Zacks Consensus Estimate for ILPT’s fourth-quarter 2025 FFO per share of 28 cents indicates more than 100% increase from the year-ago reported number. The Zacks Consensus Estimate for 2025 and 2026 FFO per share has been raised 10.5% and 11.8% over the past two months to 95 cents and $1.14, respectively.

First Industrial Realty Trust: First Industrial offers a focused way to play U.S. logistics demand. Its portfolio of roughly 70 msf is concentrated in supply-constrained coastal markets, supporting occupancy and pricing power. A fully integrated platform and strong tenant relationships position the REIT to capture steady cash flow growth.

FR currently carries a Zacks Rank #2 and is slated to release its earnings on Feb. 4, after market close. 

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.