Where Lincoln Sees Logistics Opportunity in 2026 and Beyond

While logistics fundamentals softened from their pandemic-era peaks, several indicators suggest the sector may be approaching an important inflection point.

According to PwC and the Urban Land Institute’s Emerging Trends in Real Estate 2026 research, construction starts remain significantly below historical norms, while logistics deliveries are projected to decline more than 70% from pandemic-era highs. At the same time, replacement-cost rents now exceed prevailing Class A market rents in many markets, limiting the economic feasibility of new development. [1]

Backed by Lincoln’s 262 million square feet of logistics space under management, our team uncovered a similar conclusion. Logistics inventory currently under construction has declined approximately 67% from its 2022 peak, reaching its lowest level since 2017. New construction starts have likewise fallen sharply, while leasing demand continues to recover. Lincoln believes this combination of declining supply and durable demand may create favorable conditions for rent growth and investment opportunities beginning in late 2026 and extending for the next decade. [1] [2]

Demand drivers remain intact. Consumer spending continues to account for roughly 68% of U.S. GDP, while approximately 75% of logistics demand is driven by regional distribution and local consumption. E-commerce sales have increased more than 115% since 2019, and Lincoln projects that e-commerce alone could account for 60% of new demand for logistics buildings going forward.  Manufacturing activity tied to reshoring and nearshoring initiatives continues to expand and accounts for 20% of the demand for logistics space. [2]

“The market is becoming much more selective,” says Gary Kobus, Senior Managing Director and Co-Head of Logistics. “The question isn’t whether logistics remains broadly attractive. The question is where supply will be most constrained and demand will remain most resilient.”

Perhaps no segment illustrates this dynamic better than shallow-bay logistics.

While much of the logistics development cycle over the past decades focused on larger distribution facilities, shallow-bay properties have quietly emerged as one of the sector’s strongest performers. National vacancy for shallow-bay logistics assets sits well below larger logistics formats, while rents have increased more than 40% since 2020. Transaction activity and pricing have  remained robust as investors continue to pursue the segment. [1]

Kobus believes the explanation is straightforward.

“Demand has stayed resilient, but supply has struggled to keep up.”

In many infill locations, land costs, construction costs, newly adverse zoning changes and competing uses make new shallow-bay development difficult to justify. Meanwhile, tenants ranging from local distributors and contractors to light manufacturers and service businesses continue to require well-located facilities close to customers and labor pools. [1] [2]

That supply-demand imbalance creates something alpha-seeking investors desire: pricing power.

Not surprisingly, Lincoln’s logistics investment strategy maintains significant emphasis on multi-tenant, shallow-bay, and mid-bay logistics properties where supply constraints and tenant diversification can create attractive risk-adjusted return potential. [2]

Strong population growth alone does not automatically translate into superior investment performance.

Lincoln’s approach focuses on markets where demand growth is coupled with meaningful barriers to new supply. Those barriers may take many forms:  geologic limitations, regulatory restrictions, infrastructure constraints, or limited developable land.

Kobus points to markets such as Nashville, South Florida, and Las Vegas as examples where physical constraints can support long-term fundamentals.  Nashville’s undulating terrain and abundant subsurface rock formations increase development cost and limit supply.  South Florida faces land limitations created by the Atlantic Ocean and the Everglades. Las Vegas contends with extensive government land ownership that restricts development opportunities. [2]

By contrast, markets with abundant developable land may continue attracting tenants but often face more intense competition from future supply.

“For investors, demand matters,” Kobus says. “But demand in areas that have barriers to entry, whether physical, geologic or political, is where you often find the most sustainable pricing power.”

That philosophy continues to guide Lincoln’s market selection process across target markets that encompass high-growth logistics corridors. [2]

Another trend shaping Lincoln’s outlook is the continued evolution of U.S. manufacturing and supply chains. While e-commerce remains a key demand driver, manufacturing investment is creating an additional source of  logistics demand that did not exist at the same scale a decade ago.

Companies are increasingly investing in domestic manufacturing capacity while simultaneously reshaping supplier networks through nearshoring initiatives. Lincoln’s research shows manufacturing leasing activity increased significantly during 2025, while hundreds of billions of dollars continue to be deployed into U.S. manufacturing expansion. [2]

Importantly, manufacturing growth creates multiplier effects throughout logistics networks. Every new manufacturing facility requires suppliers, storage, transportation, and distribution infrastructure nearby.

“We’re seeing increased relevance for markets that sit at the intersection of manufacturing and logistics,” Kobus says. “Markets that can provide access to skilled labor and access to abundant power win. The growth isn’t isolated to the factory itself—it’s creating broader demand across entire logistics ecosystems.”

This shift is helping to elevate inland and middle-country markets while reinforcing the importance of strategically located distribution assets that support evolving supply chains. [2]

For Lincoln, conviction starts with information.

The firm’s logistics platform encompasses approximately $6.9 billion  in logistics assets under management, more than 262 million square feet of logistics leasing and management activity, and a 4,200-employee  network of local teams operating in 35 markets nationwide. In 2025 alone, Lincoln reviewed roughly $45 billion of logistics opportunities through its sourcing pipeline. [1] [2]

That local presence provides market insights that often emerge  well before they appear in national research reports. The firm’s local presence also provides the information necessary to both  source and select the best individual investment opportunity as well as underwrite that opportunity  with conviction.

Through direct relationships with tenants, brokers, municipalities, and local market participants, Lincoln can  identify shifts in demand, tenant preferences,  leasing activity, development trends, and market constraints at the micro-market level.

As Kobus explains, “Some of the most important investment decisions aren’t made at the national level. They’re made market-by-market, submarket-by-submarket, but most importantly, building-by-building. We’re able to be that granular in our underwriting.”

After nearly 60 years of developing, owning, operating, and investing across market cycles, Lincoln believes the next phase of logistics investing will favor exactly that kind of local knowledge, disciplined execution, and selective capital deployment. [1] [2]

Connect with Lincoln’s Investment Management team to learn more about the firm’s logistics investment strategy, market perspectives, and opportunities across today’s evolving  logistics landscape. For more information, visit www.lpc.com or contact Gary Kobus, Senior Managing Director and Co-Head of Logistics, or Jennifer Lundmark, Head of Investor Relations.

Sources
[1] IM Capabilities_3Q26
[2] Logistics Fund II_3Q26