Several years of strong growth in Northern Nevada industrial development have been followed by a major shift. The post-pandemic surge, marked by low vacancy rates, rising rents, and robust speculative construction, slowed sharply in 2025, creating a more cautious outlook for 2026.
Market data and broker commentary point to a clear inflection point. Industrial vacancy across all product types climbed into the double digits last year, reaching roughly 11%, as a wave of newly delivered Class A buildings outpaced tenant demand. At the same time, rental rate growth leveled off after years of rapid escalation. Together, those dynamics have significantly dampened near-term development activity.
Brian Armon, senior vice president and principal at NAI Alliance, described the shift as abrupt and widespread.
“Across the board, we saw a drastic slowdown in construction in 2025,” Armon said. “Projects that broke ground are being taken to a pad-ready stage and then stalled. In many cases, they’re just sitting.”
From Red-Hot to Restrained
The slowdown represents a sharp reversal from the industrial market’s peak just a few years earlier. In the second quarter of 2022, vacancy across Northern Nevada dipped below 1%, creating intense competition for space and pushing developers to build aggressively in nearly every submarket.
Construction volumes reflected that momentum. At the end of 2021, approximately 5.4 million square feet of industrial space was under construction. That figure ballooned to 9.1 million square feet by the close of 2022 and remained elevated in 2023, when roughly 8 million square feet of new product was underway.
The crest of the development cycle occurred at the end of 2024, when an estimated 11.2 million square feet of mostly Class A industrial space was under construction across the region. Since then, activity has fallen off sharply. By the third quarter of 2025, construction volume had dropped to about 3.7 million square feet, and Armon expects the year to close with roughly 2 million square feet in progress entering 2026.
That represents an estimated 82% year-over-year decline in new industrial construction.
“It’s a drastic decline,” Armon said, underscoring how quickly sentiment has shifted among developers and lenders.
Vacancy Rises, Rents Level Off
The surge in speculative construction that followed the pandemic has been a major contributor to today’s softer conditions. Many of the large-format Class A distribution and fulfillment facilities delivered in 2024 and 2025 entered the market without pre-leased tenants, pushing vacancy higher as absorption slowed.
While tenant demand remains present, it has not been sufficient to immediately fill the influx of new space. As a result, landlords have become more flexible, and rental rates—after climbing steadily for five years—began to stabilize in 2025.
Even so, Northern Nevada continues to compare favorably with other Western markets.
“Reno is still competitive relative to places like Salt Lake City, Phoenix, and even Las Vegas,” Armon said. “We used to be the best value in the West. Now it’s much closer, but we’re still in the mix.”
Land Deals Stall as Developers Hit Pause
Land acquisitions, often the earliest indicator of future development, also slowed significantly over the past year. According to Armon, most major land transactions in 2025 were tied to data center development rather than traditional industrial projects.
“We saw some large parcels trade hands, but primarily for data center uses,” he said. “There wasn’t much activity related to new industrial development.”
The lack of land deals reinforces expectations that construction will remain muted through much of 2026 as developers focus on leasing up existing inventory and reassessing project timelines.
Long-Term Fundamentals Remain Intact
Despite the near-term headwinds, brokers and developers say the broader outlook for Northern Nevada remains positive. The region continues to attract new and expanding companies seeking distribution, fulfillment, and e-commerce facilities that can efficiently serve West Coast markets.
Reno’s geographic position remains one of its strongest selling points. Located within a one-day truck drive of major population centers in California and the Pacific Northwest, the region offers logistical advantages that are difficult to replicate elsewhere.
However, global economic factors have weighed more heavily on Northern Nevada than on some competing markets. Shifting tariff policies have disproportionately affected local industrial tenants, many of whom rely on goods imported from Far East countries targeted by higher trade barriers. Those uncertainties have caused some tenants to delay expansion decisions, further slowing absorption.
Select Projects Still Moving Forward
Even with the broader pullback, several developers are moving ahead with targeted projects they believe are well aligned with current demand.
Private developer HCM recently broke ground on a three-building industrial project in Spanish Springs designed to serve smaller tenants. The development includes two 23,750-square-foot buildings that can be subdivided into spaces as small as 2,375 square feet, along with a larger 67,500-square-foot building divisible into units of approximately 6,750 square feet.
“There’s really no fully planned business park like this in the area,” said Tomi Jo Lynch, first vice president of industrial properties at the Reno office of CBRE. She noted that demand for smaller, flexible industrial spaces remains strong even as large-box vacancy rises.
Another major initiative is taking shape at the Victory Logistics District. In March, Mark IV Capital announced it was installing roads and utilities to open up 600 acres for future development.
“This property is in a great location, and the utility infrastructure really helps advance decision-making for prospective users,” said Rick Nelson, senior director of Nevada operations for Mark IV Capital.
Momentum at the site accelerated in April when Microsoft acquired more than 300 acres within the Victory Logistics District for data center development. Mark IV Capital President and CEO Evan Slavik said the deal signals broader potential for additional data center projects at the site.
Phased Development Reflects New Reality
At the 580 South project—an 88-acre mixed-use development at the intersection of Mount Rose Highway and Interstate 580—Panattoni Development has adopted a measured approach. Construction has begun on two of four planned industrial buildings, one of which is fully pre-leased. The second, a 198,000-square-foot structure, is being built on a speculative basis.
Tim Schaedler, Panattoni’s Nevada and Northern California partner, said the company is intentionally pacing construction.
“We’re going in phases and looking for some pre-leasing before we start the next building,” Schaedler said. “It’s about matching development to real demand.”
A Pause, Not a Permanent Pullback
According to NAI Alliance, as much as 20.8 million square feet of industrial development remains in the pipeline across Northern Nevada. However, most of those projects are unlikely to break ground until existing space is absorbed and market conditions improve.
Armon believes the current slowdown is a natural correction rather than a sign of long-term weakness.
“The market will stabilize and adjust,” he said. “With fewer land transactions and very little new construction, the existing supply will get absorbed. Once that happens, the cycle will start again.”
In his view, many of the shelved or delayed projects could reemerge within the next two to three years, positioning Northern Nevada for its next growth phase. However, it is one shaped by more cautious underwriting and closer alignment with tenant demand.
