Small and midsize industrial properties — typically less than 300,000 square feet — have emerged as a resilient bright spot, maintaining low vacancy, continued demand and significantly less competition from new supply than larger buildings.

These assets continue to benefit from long-term structural demand drivers such as ecommerce expansion, reshoring and growth in advanced manufacturing, while also facing less supply-side pressure, particularly in infill locations. With tighter supply dynamics, faster leasing velocity, and significant embedded rent growth potential as below-market leases roll over, they offer investors a compelling combination of resilience, demand durability and attractive risk-adjusted returns.

A big part of their strength comes from a structural supply imbalance. While smaller buildings represent 71 percent of the national industrial inventory, they have accounted for only 38 percent of new development since 2022. That mismatch has kept vacancy