There is over 20 billion square feet of industrial real estate in the United States, according to Jack Fraker, president, global head of industrial and logistics capital markets at Newmark. But while the one-million-square-foot deals generate the most headlines and excitement, “the vast majority of the U.S. inventory is smaller buildings; small-bay buildings.”
At I.CON East this week in Jersey City, New Jersey, Fraker invited three panelists to share insights into how their companies have found success in the small-bay market and why this often-overlooked sector shows such strong fundamentals.
Brian Whitmer, co-founder and managing partner at Doors & Spaces, said the company was founded specifically to buy and build small-bay product, with its average tenant size under 3,000 square feet. “As we’ve come to understand the small-bay space, there’s a break point at which the tenant is either covered by the brokerage community or they’re not. And if you’re a tenant that’s sub-3,000 square feet, you’re going to have to go through social media, you’re going to go through Facebook, and you’re going to go through nontraditional real estate channels to source your space. And that’s where we’ve had our biggest impact and, I think, our competitive advantage.”
WareSpace, founded in 2021, focuses on what Jeff Jenkins, vice president of acquisitions, termed “microindustrial,” with the average suite size about 800 square feet. The company caters to small businesses that need small, flexible warehouse space. “We’re not ground-up developers. We buy existing boxes that are usually functionally obsolete because most of our tenants [are] coming out of their home or their garage” to build up their business.
Greek Real Estate Partners, founded in 1934, specializes exclusively in industrial, although not specifically in small-bay. “But small-bay makes up a very important part of our own investment portfolio,” said David Greek, managing partner at the company. “It’s something we’ve been involved with for a very long time and have developed some management techniques and leasing techniques within these spaces that keep them well occupied and great investments in the long term.”
Much of Greek Real Estate Partners’ small-bay portfolio is made up of assets that were single-tenant, Class A warehouses 30 to 40 years ago. As the utility of the buildings have changed, the company has divided them up into smaller spaces and leased them to multiple tenants, typically at a minimum size of 5,000 square feet and ideally closer to 10,000. “You’re looking at it from a perspective of buying older, dysfunctional assets … But the key is really keeping occupancy high. That is one of the secret sauces of making sure these assets perform in the long run.”
Whitmer said Doors & Spaces takes a commodity approach to small-bay. “You’re not working with a large corporate company that’s looking out 24 months or committing to a build-to-suit. These tenants need it, and they need it now, because they’re expanding out of a garage or wherever it is … So we’re either buying that profile or we’re building that profile.”
Jenkins said WareSpace is “focusing a little bit more on adaptive reuse. We’re trying to be the largest buyer of single-story office call centers in the country. And we’ve found success adaptively reusing those functionally obsolete buildings beyond just industrial buildings. And these office call centers … tend to be in locations that are also tangential to retail and nicer suburbs or closer to our tenant base.”
Each of the panelists mentioned the stability and strong fundamentals that small-bay offers. “The occupancy rate generally, if managed well, stays consistent and stays relatively high,” Greek said. “You might be underwriting 5% or 10% continual vacancy because of the constant tenant turnover and the number of tenants in your building. But unlike [developing] big box, there’s never that binary of either I have cash flow or I don’t. So it is, in the long run, a much more stable, much better cash-flowing investment than investing in a one-million-square-foot big box distribution center.”
- Among the other insights and takeaways shared by the panelists:
- Small-bay’s resilience stems from hyperlocal demand, flexible short-term leasing and diversified tenant bases that stabilize cash flow.
- Small businesses often prioritize proximity and convenience, supporting “stickiness” despite shorter leasing terms.
- Success in the market is operationally intensive and often requires hands-on management and tenant education.
- There is support for small-bay from capital markets when lenders understand the model.
- The use of AI is helping to streamline and qualify tenant leads, but it is not replacing the importance of human relationships.
Ultimately, small-bay’s blend of flexibility, diversification and steady demand positions it as one of the most resilient and compelling investment strategies in today’s market.
This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON East 2026. Learn more about JLL at www.us.jll.com or www.jll.ca.
