On today’s show we are talking about small bay industrial. This is a segment that offers incredible flexibility. It doubles as office space, as a gym, as last mile inventory for e-commerce. It can even be used as a man-cave for exotic vehicle collections.

The past few years have seen a lot of large bay industrial capacity added to the market. In fact, I think there has been so much new supply added, that in some markets, there is excess supply. Amazon overbuilt by nearly 33M SF in 2022 alone. Of course they’re just one supply chain.

Adaptability is one of the primary advantages of small-bay facilities. It allows properties to be easily reconfigured to suit different operational needs, allowing landlords to benefit from higher occupancy rates, reduced downtime between tenants, and the ability to cater to shifting market demands. Low competition from new small-bay development enhances the landlord-friendly aspect of small-bay facilities and allows for consistent rent appreciation. We have seen rents in many major cities rise from $8 per SF NNN to over $14 per SF NNN. This represents a significant opportunity to buy existing properties and push rents higher.

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