Richmond’s industrial real estate market has changed considerably over the past several years. What was once a relatively quiet Mid-Atlantic logistics market became one of the country’s most competitive industrial markets during the pandemic. Record leasing activity, limited availability and rapidly rising rents attracted developers and institutional capital from across the country.
Today, the market is more balanced — and, in my opinion, healthier.
The fundamentals remain strong, but the days of putting a sign on a warehouse and watching tenants compete for the space are behind us. For owners, developers and investors, success in Richmond’s industrial market now requires a much closer look at location, building functionality, basis and tenant demand.
The numbers tell the story. Richmond entered the second half of 2026 with an industrial vacancy rate of approximately 5.5 percent, according to CBRE, while the market posted positive net absorption of 136,000 square feet during the second quarter. Average asking rents reached $8.86 per square foot, up 2.4 percent from the prior quarter. At the same time, the development pipeline has grown to approximately 12.6 million square feet under construction, of which approximately 3.9 million are speculative projects.
That amount of new supply deserves attention.
Richmond has historically benefited from having relatively little industrial product available compared with the amount of demand generated by its strategic location. Today, however, tenants have considerably more choices — particularly in the large-box, Class A segment. More than 1.5 million square feet of industrial space was delivered during the first half of 2026, compared with only 379,000 square feet during the first half of 2025.
This does not mean Richmond is oversupplied. It means the market is normalizing.
From a brokerage perspective, we are seeing tenants become much more deliberate. Companies are taking longer to make decisions, comparing multiple buildings and scrutinizing occupancy costs more closely. They are also asking more questions about functionality: How many dock doors does the building have? What is the trailer parking ratio? Can the site accommodate their fleet? What is the power capacity? How quickly can they occupy the building?
Those details matter because industrial real estate is ultimately about logistics and operations — not just square footage.
Richmond’s greatest advantage is its location. I-95 connects the market to the Northeast and Southeast, while I-64 provides a critical east-west connection. The Richmond region also benefits from its relationship with the Port of Virginia and the Richmond Marine Terminal. Continued investment in Virginia’s port infrastructure is strengthening the Commonwealth’s position as a major logistics hub, including a $1.4 billion Gateway Investment Program designed to improve capacity and efficiency throughout the port system. That connectivity continues to attract manufacturers, distributors, third-party logistics providers and retailers.
The market is also becoming more geographically diverse. While the traditional I-95 corridors remain extremely important, significant industrial activity continues to expand into Caroline, New Kent, Petersburg and Prince George County and other surrounding jurisdictions.
For developers, the challenge is determining where the next generation of industrial product belongs.
Land costs, infrastructure requirements, zoning, stormwater, power availability and access to major highways all play a role. A site that looks inexpensive on a per-acre basis may not be inexpensive once the cost of utilities, road improvements, grading and other site work is incorporated.
That is one reason I expect Richmond’s next phase of development to be more selective. The market can absorb new industrial space, but not every location — and not every building — is going to perform equally.
The same is true for existing properties. Functional industrial buildings with good interstate access, modern loading, adequate parking and competitive clear heights continue to attract tenants and investors. Older buildings can still compete, but owners increasingly need to evaluate capital improvements and determine whether their property can realistically compete with new construction.
For investors, this creates an interesting environment. Industrial remains one of the most desirable commercial real estate sectors, but simply buying an industrial building is no longer an investment thesis. Buyers need to understand lease rollover, tenant credit, functional obsolescence, replacement cost and the competitive supply pipeline.
In other words, basis matters again. That is a healthy development for the Richmond market.
The extraordinary rent growth experienced from 2020 through 2023 reset expectations for owners and investors. Richmond’s industrial rents have increased substantially since the beginning of the decade, but future growth is likely to be more measured. New supply gives tenants leverage, while higher construction and financing costs place greater pressure on developers to get projects right from the beginning.
Looking ahead, I remain bullish on Richmond industrial real estate. The region has the infrastructure, workforce, transportation network and location necessary to support long-term industrial growth. The market is also large enough to attract institutional capital while being small enough that individual transactions can have a meaningful impact on supply and pricing.
The next several years may not produce the dramatic rent increases or historically low vacancy rates that defined the pandemic era. Instead, Richmond is entering a more mature phase — one where quality, location and execution will separate the winners from the rest of the market.
For those of us working in the Richmond industrial market every day, that may actually be the most exciting part. The market is no longer simply about finding industrial space; It is about finding the right industrial space, at the right basis, in the right location — and creating value through better real estate decisions.
— By Brad Lowry, first vice president of CBRE’s Richmond office