The cost of building America's next generation of factories, data centers and industrial facilities isn't going back to pre-pandemic levels. At the same time, demand for industrial space is picking up, and investors are growing more comfortable with the sector's long-term prospects. This week's Research Round-Up looks at new reports from JLL, Colliers and Cushman & Wakefield. Together they describe a market where construction costs stay high, development gets more selective and the competition for skilled labor could decide which projects move forward.
1. JLL: Construction costs have reached a new normal
3% to 6% a year. That's how fast global construction costs are now rising, roughly double the 2% to 3% norm before 2020, according to JLL's Global Construction Costs Index 2026, published Oct. 15. Costs have climbed 25% to 30% across global markets over the past five years. The pandemic-era price spikes have eased, but JLL says developers shouldn't expect prices to return to earlier levels. It forecasts another 3.1% to 4.2% increase globally in 2027, and 3.2% to 4.2% in North America.
What the numbers say: Labor is a big part of the problem. Construction wages rose 8% to 35% across markets from 2020 to 2026. In JLL's survey of its project and development markets, 64% reported shortages of electricians and of carpenters, and 58% reported shortages of plumbers and HVAC technicians, all of which are affecting project costs. The firm says demand from manufacturing facilities, high-performance offices and data centers is sharpening the competition for those specialists. "Labor constraints have created a structural shift rather than a temporary disruption," said Ruth Hynes, senior director of research at JLL.
Waiting it out carries its own cost. Key mechanical, electrical and plumbing systems now have lead times of more than 20 weeks. "Developers who delay projects waiting for a return to 2019-era costs are paying for that wait twice — once in carrying costs, and again when the project restarts into a market that's moved further away, not back," said Ben Jackson, JLL's global head of development services.
Why it matters: For economic developers competing for major capital investments, access to skilled construction labor, reliable contractors and specialized equipment could weigh as heavily as land, infrastructure and incentives. JLL also finds a growing divide between property types. Industrial and logistics facilities and data centers have absorbed rising costs better than office and retail because their rents and values have grown faster. JLL's central advice is to keep re-testing project economics through planning and construction instead of relying on the assumptions made at the start.
2. Colliers: Industrial demand is at its strongest since 2022
Second straight quarter. U.S. industrial demand outpaced new deliveries again in the third quarter, and net absorption reached its strongest quarterly total since 2022, according to Colliers' Q3 2026 U.S. Industrial Market Statistics. Vacancy declined as tenants took more space than developers delivered, and the construction pipeline expanded.
What the numbers say: The third quarter extends the turn Colliers reported for the second, when demand passed new supply for the first time since 2022. (We covered those numbers in last week's Round-Up.) It's a clear change from the oversupplied market that followed the pandemic-era construction boom, and a growing pipeline suggests developers are starting to respond.
Why it matters: Modern industrial buildings could get harder to find in the markets where demand is recovering fastest. That affects companies weighing an existing building against a build-to-suit. As vacant space gets absorbed, what's actually available on the market becomes a bigger factor in where a project lands.
3. Cushman & Wakefield: Investors still like industrial
Cap rates up modestly since spring. Higher borrowing costs haven't shaken investor confidence in industrial real estate, according to Cushman & Wakefield's Fall/Winter 2026 Industrial/Logistics Investor Outlook, released Oct. 13. Cap rates have risen with Treasury yields and financing costs, but the firm reports that buyer and seller expectations continue to align.
What the numbers say: Industrial remains a favored asset class heading into 2027, backed by steady tenant demand, disciplined new development and healthy occupancy. Value-add properties with shorter lease terms are especially sought after, because owners can raise rents as leases roll or after repositioning. Cushman & Wakefield expects fundamentals to stay stable through 2027 as supply growth moderates.
Why it matters: Colliers tracks what tenants are doing, and Cushman & Wakefield tracks how investors are responding to it. Both point to continued interest in industrial real estate. For communities chasing industrial investment, that interest comes with closer scrutiny of project economics, development risk and the quality of each building.
The Location Decision takeaway
All three reports point to an industrial market with improving demand and harder math. Construction costs are still rising, skilled trades are hard to find, and even as leasing strengthens, financing and building costs are shaping what gets built.
That changes how communities compete. An available site may not be enough on its own. Communities that can show construction workforce capacity, ready infrastructure and a realistic development timeline will have an edge when companies decide where and when to commit capital, and the next industrial cycle may reward the places that can get projects built as much as the places with demand.
Seen research we should read? Send it to [email protected].