Stag Industrial NYSE: STAG reported first-quarter 2026 results against a backdrop of what management described as improving U.S. industrial leasing conditions, including a rebound in demand for larger-box space and continued strength in the mid-size segment where the company is concentrated.
Leasing activity remains robust as demand broadens
Chief Executive Officer Bill Crooker said industrial leasing “velocity and volume are healthy both market-wide and within STAG’s portfolio,” adding that year-over-year absorption continues to improve. He noted that “the multi-year weakness in demand for big box product has reversed,” with vacancy in larger spaces declining in many markets, while activity has also been strong in the 150,000 to 250,000 square foot segment.
Chief Financial Officer Matts Pinard reported Core FFO per share of $0.65 for the quarter, up 6.6% from the prior year. During the period, the company commenced 37 leases across 6 million square feet, producing cash and straight-line leasing spreads of 20.9% and 39.6%, respectively. Pinard said this was a quarterly record for total operating portfolio square feet leased.
Pinard said tenant demand has been “strong” across multiple industries, including air freight and logistics, retail, and containers and packaging. Retention for the quarter was 69.5%, and management maintained full-year retention guidance of 70% to 80%.
Data center-related leasing emerges as a demand driver
Crooker highlighted a newer source of industrial demand tied to the rapid acceleration of data center construction. He said third-party logistics providers supporting those developments have created “a new segment of leasing demand for traditional warehouse facilities.” Since the beginning of 2025, STAG has signed eight leases totaling 1.6 million square feet with data center-related tenants.
In response to analyst questions, Crooker said this activity has been most visible in Southeast and Midwest markets. He cited South Carolina—where he said the company signed three leases, including two in Greenville-Spartanburg—as well as Nashville, Wisconsin, Ohio, and Charlotte. Crooker added that the company anticipates further demand from data center-related tenants.
He also provided additional details on the tenant mix, describing a range of uses supporting data center development and operations, including a 3PL “serving a Meta data center contract,” generator distribution, light assembly related to power conversion systems, and manufacturing battery components. Crooker said the weighted average lease term for these data center-related leases is “a little over eight years,” and that leasing spreads on the 1.6 million square feet were “about 35%,” with “strong credits backing these leases as well.”
Addressing underwriting considerations, Crooker said tenants increasingly want more power in their facilities, but characterized the leased assets as “traditional warehouse” buildings being used for different purposes. He described the trend as an incremental demand driver rather than a fundamentally different property type.
Portfolio performance, occupancy cadence, and escalators
Same-store cash NOI grew 4.1% in the first quarter, while Pinard said credit loss was minimal. However, management discussed the timing impact of occupancy changes on same-store results. Pinard explained that first-quarter occupancy decline was only partially reflected because “a good portion of the non-renewals occurred near the end of the quarter,” meaning the second quarter is expected to reflect “the full impact of that vacancy.”
Pinard said the first-quarter 4.1% same-store cash NOI result included the effect of 60 basis points of average occupancy loss, versus 120 basis points of period-end occupancy loss. Same-store occupancy was 96.6%, which he called “a very healthy level.” Looking ahead, Pinard said STAG expects “the trough occupancy to occur in the second quarter,” with occupancy improving during the second half of 2026. He added that the company’s budgeting still assumes nine to 12 months of lease-up time for vacant assets and reiterated the company’s expectation for average same-store occupancy of 96.5% for the year.
On embedded rent growth, Pinard said the weighted-average annual escalator across the portfolio is 2.9%, “almost 3%,” and is expected to rise over time as new leases increasingly include escalators in the 3% to 3.5% range, averaging around 3.25%.
Management also maintained its view on market rents. Crooker said STAG’s market rent growth guidance remains 0% to 2%, and while activity has been “a little bit stronger” than initially expected, it is still early in the year and the company has not changed its assumptions.
Investment activity, development, and capital markets commentary
STAG pointed to stable capital markets and improving transaction momentum. Crooker said industrial remains “one of the most liquid asset classes,” and the company’s internal transaction pipeline has grown to $3.9 billion.
During February, STAG acquired a 750,000-square-foot newly constructed Class A facility in Platte City, Missouri for $80.7 million, which management said reflected a 6.1% cap rate. Crooker said the building is strategically located in a northwest Kansas City submarket with access to highways and the Kansas City International Airport. The property is 100% leased for 12 years with 3.2% annual rental escalators.
On development, Crooker said STAG had seven buildings totaling 1.8 million square feet not yet in service as of quarter end, with an expected stabilized yield of 7.1%. Subsequent to quarter end, the company signed two new development leases: a 73,000-square-foot lease at its Casual Drive development in Greenville, bringing that building to 100% leased, and a 45,000-square-foot lease at a Charlotte development project, bringing that building to 90% leased.
Management also discussed a land acquisition announced during the call. Crooker said the company acquired land adjacent to an existing STAG building in Dallas, Texas, large enough for a roughly 340,000-square-foot facility, and expects to start development shortly. He said the transaction will be about $38 million and is expected to generate a 7.4% yield on cost. Chief Investment Officer Mike Chase added that the project is a “committed build to suit,” with a tenant already committed.
Chase said investment sales momentum that strengthened in the fourth quarter of 2025 carried into the first quarter of 2026. He attributed increased activity to stability in capital markets and “an increase in confidence from both buyers and sellers,” with more buyers returning to the market and deal flow continuing into the second quarter.
Crooker added that bid-ask spreads have tightened and that the industrial transaction market could pick up as the second quarter progresses. He said the $3.9 billion pipeline is comprised of about 70% single-asset transactions and 30% portfolios.
On valuations, Crooker said cap rates on individual deals are generally near levels similar to STAG’s recent acquisition pricing, though some trades occur 25 to 50 basis points lower than STAG is willing to pay. He also said portfolios are still commanding a premium, estimating a 25 to 50 basis point “portfolio premium” on private transactions.
Guidance and outlook remain unchanged
Pinard said the company is maintaining all guidance for 2026. He noted that as of the call date, 79% of forecasted leasing for 2026 has been addressed “at levels consistent with our initial guidance,” and STAG continues to expect cash leasing spreads of 18% to 20% for the year. Crooker said the company expects national vacancy rates to peak in the coming months, with an inflection point in the back half of 2026.
In market-level commentary, Crooker cited San Diego as “a little challenging” for one asset and said Memphis and Pittsburgh are “a little slower.” He pointed to Greenville-Spartanburg and Charlotte as improving markets and identified Houston and Nashville as strong performers, while also noting improving conditions in Midwest big-box distribution markets such as Columbus, Louisville, and Indianapolis.
About Stag Industrial NYSE: STAG
Stag Industrial, Inc is a real estate investment trust (REIT) that specializes in the acquisition, ownership and operation of single-tenant industrial properties throughout the United States. The company's portfolio is focused on free-standing warehouses, distribution centers and light manufacturing facilities designed to meet the logistical needs of a diverse tenant base. By concentrating on properties with straightforward layouts and minimal common-area maintenance, Stag Industrial seeks to deliver stable rental income and attractive risk-adjusted returns for its shareholders.
Since its founding in 2010 and initial public offering in 2011, Stag Industrial has pursued a disciplined investment strategy centered on high-quality, well-located assets.
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