The Puget Sound industrial market closed the first quarter of 2026 with vacancy rising to 11.5%, increasing 230 basis points year-over-year and marking a new high for the region, according to a recent report by Savills.
Demand softened further, with net absorption totaling negative 0.8 million square feet year to date, a reversal from the modest positive absorption recorded in Q1 2025. Supply additions accelerated at the start of the year, with 2.5 million square feet delivered year to date, the highest level of new completions since late 2023.
The development pipeline continued to shrink significantly in Q1, with 3.1 million square feet currently under construction, down 3.0 million square feet year over year. Although several large projects were delivered during the quarter, limited preleasing activity has kept much of this new space available. Vacancy will likely remain under pressure, and development activity will likely stay constrained, with limited new starts as developers respond to softer fundamentals and higher vacancy.
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