The 18th Month Window (And Why It Looks Different Everywhere)
Every distribution executive with a lease expiring in late 2026 or 2027 is asking the same question: how hard should we push right now?
The answer depends entirely on where you are.
I'm currently working a 350,000 SF e-commerce facility renewal in Phoenix's West Valley, where the market has transformed so dramatically over the past five years (the size of the Glendale, AZ industrial market quadrupled!) that landlords and tenants are operating from different assumptions. The tenant wants operational and financial certainty. The landlord is waiting for rents to climb out of the trough. Neither timeline aligns, which is exactly when 18 months of runway becomes a strategic asset rather than a procedural detail.
What makes national tenant work interesting is that the same 350,000 SF requirement produces very different leverage depending on the market. Cycles are not synchronized. Strategies that work in one region fail in another.
Here's how that window is expressing itself right now.
Phoenix is a timing play. A massive supply wave created real choice, but construction has now pulled back sharply. Leverage exists today because inventory outran demand. Now there are 4-5 existing buildings and 4-5 build to suits available in all major 100,000 - 1,500,000 SF size ranges.
The Inland Empire is a choice play. Availability in the 250,000–500,000 SF range has expanded meaningfully, concessions are common, and landlords are competing for credit tenants. But with construction starts collapsing, today's options are unlikely to exist 18 months from now. It feels like 10-14 months to gain equilibrium.
Orange County mid box is soft. Surprisingly no +100,000 SF lease deals were signed last quarter in Orange County. Though soft, mid-sized availability that is functional and optimal for operations are rare, labor density matters, and the usable inventory is narrower than headline vacancy suggests. Leverage exists, but only for tenants who are precise about requirements and timing.
Los Angeles infill is a stabilization play. Rents in Los Angeles are the same this year as they were in 2021. That means there is a form of rate reset that is taking place for certain vintage leases. Since relocating in LA is expensive between racking, permitting, downtime, and labor disruption, the real leverage is using the soft market to negotiate economics that make staying the obvious choice, without spending capital to relocate.
The pattern across all four markets is the same. Construction pipelines are 5-8% their peak. New starts are still muted. For tenants with 18 months of runway, this is the window. Not next year.
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# Commercial Builders Are Losing Their Appetite to Build Anything but Data Centers
By Will Parker
Jan. 19, 2026
Commercial real-estate construction is poised for little or no growth this year. Data centers are the notable exception.
Higher interest rates, steeper material prices and a tight labor force provide significant headwinds to new construction this year. Spending to build offices, hotels, apartment buildings and warehouses is projected to fall in 2026, according to estimates from FMI Corp., a Raleigh, N.C.,-based construction consulting company.
But data centers, sought by large tech companies to run artificial-intelligence platforms, are a bright spot. Construction of these properties is less deterred by those higher costs because of still unmet demand from hyperscalers.
Amazon.com, Google and Oracle and other top users of data centers continue to finance billions of dollars of new AI-focused development, construction analysts and executives said.
"The cash is not an issue for these people," said Jay Bowman, partner at FMI.
Spending on construction of data centers will rise by 23% in 2026 compared with the year prior, according to FMI estimates. That would lift them to more than 6% of all nonresidential building construction, up from 2% in 2023.
The massive scale and expense of data-center projects presents a unique opportunity for construction firms compared with other property types, said Andy Halik, president of Chicago-based construction company Skender.
Data centers can cost more than $1 billion to build and employ thousands of workers on the construction site. By contrast, Skender's other large-scale commercial real-estate projects usually cost hundreds of millions of dollars and employ hundreds of workers.
Data centers cost more because of the electrical infrastructure needed to support them, such as power substations and generators, that these firms also build out.
"The infrastructure requirements in essence more than double" the size, Halik said.
Not counting data centers, total investment into both existing and new nonresidential structures has barely budged since 2020, while data-center investments have soared.
No property sector is immune to a potential contraction in the labor force this year. The tight construction timelines for many data-center projects could come under pressure if labor pools are too shallow, said Michael Guckes, chief economist at data and software firm ConstructConnect.
"Once you literally have every contractor within a state and every surrounding state who's available getting paid top dollar for this stuff, you just can't move physically any faster," Guckes said.
Many construction firms say they are starting to feel the effects of a tighter immigration policy on labor. A third of construction firms said their operations were affected by immigration enforcement actions in the past six months, according to a survey of more than 900 construction companies by the Associated General Contractors of America, an industry trade group.
Nearly a quarter said their subcontractors lost employees as a result of immigration enforcement. Large construction firms with annual revenue of $500 million or more were the most likely to report enforcement impacts.
AGC is lobbying the Trump administration for a new visa program for guest workers to alleviate worker shortages. Net migration to the U.S. in 2025 was likely negative for the first time in half a century, according to recent estimates from the Brookings Institution.
Tariffs also continue to weigh on building projects, though firms say those effects have yet to be fully felt. Forty percent of firms surveyed by AGC said they raised their bid prices in response to actual or proposed tariffs last year and only 11% of firms said they absorbed all tariff-related cost increases themselves.
Price increases from tariffs have hit especially hard for products made from aluminum, steel, copper and lumber when they cannot be sourced domestically, said Steve Stouthamer, an executive at Skanska USA Building, a construction company.
Overall, nonresidential building construction, which includes healthcare and educational facilities and a mix of both public and private buildings, is projected to total $844.4 billion this year, a 0.14% increase from 2025, FMI said.
Accounting for inflation, the figure would represent a decline in real terms.