Investment Thesis
Why Small Bay Industrial
The most supply-constrained, demand-rich asset class in commercial real estate. Here is the data behind our conviction.
Market Fundamentals
The Numbers Behind the Thesis
Small bay industrial outperforms on the metrics that matter most to investors: vacancy, supply dynamics, tenant quality, and cash flow.
National Vacancy
Small bay industrial vacancy is near historic lows nationally. In our target markets, functional vacancy is even lower. Demand from contractors, e-commerce, and small businesses continues to outpace supply.
Tenants Per Property
Multi-tenant properties spread risk across dozens of leases. No single tenant departure threatens the asset. Compare that to a single-tenant NNN retail deal.
New Supply
Zoning restrictions, construction costs, and land scarcity make new small bay development uneconomic in most markets. Existing assets benefit from a structural, permanent supply shortage.
Rent Per SF
Small bay tenants pay premium rents per square foot relative to bulk industrial. Short lease terms allow frequent mark-to-market rent increases that compound over time.
Asset Class Comparison
How Small Bay Industrial Stacks Up
A side-by-side comparison of the asset classes most commonly used by accredited investors and 1031 exchange participants.
| Metric | Small Bay Industrial | NNN Retail | Multifamily | DSTs |
|---|---|---|---|---|
| National Vacancy | ~2-3% | 5-7% | 6-8% | Varies |
| New Supply Risk | Very Low | Low | High | N/A |
| Tenant Diversification | 50+ tenants | 1 tenant | 50-300 units | Varies |
| Lease Duration | 1-3 years | 10-25 years | 12 months | Varies |
| Rent Growth Opportunity | Strong (frequent mark-to-market) | Limited (fixed escalations) | Moderate | Limited |
| Investor Control | Direct ownership / LP | Direct ownership | Direct ownership | None |
| Upfront Fee Load | Minimal | Minimal | Minimal | 10-15% |
| E-Commerce Headwind | Tailwind | Headwind | Neutral | Varies |
Demand Drivers
What Is Fueling Growth
Three macro trends are driving sustained demand for small bay industrial space across the U.S.
E-Commerce & Last-Mile
Online retail growth is driving demand for local distribution and fulfillment space. Small bay properties serve the last-mile delivery chain that big-box warehouses cannot.
Trades & Contractor Growth
Residential construction, infrastructure spending, and aging housing stock are fueling demand from electricians, plumbers, HVAC techs, and other trades who need workspace.
Small Business Formation
Small business creation is at record levels. These businesses need affordable, functional space — exactly what small bay industrial provides.
Portfolio Characteristics
What Our Assets Look Like
We target a specific profile of small bay industrial property that maximizes cash flow stability and value-add potential.
- Multi-tenant buildings with 20-80+ units
- 1,000-5,000 SF units with roll-up doors
- Grade-level access for contractors and trades
- Markets with strong employment and population growth
- Below-market rents with mark-to-market upside
- Deferred maintenance or repositioning opportunity