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For the last five years, the headlines in commercial real estate have been dominated by "Big Box" logistics—million-square-foot distribution centers leased to giants like Amazon and FedEx.
But as we settle into 2026, the data is telling a different story. While the giants are facing rising vacancy rates due to over-construction, a quiet winner has emerged: Small Bay Logistics.
What is Small Bay? Think of the local industrial park near the city center—buildings with 10 or 15 tenants, each occupying 2,000 to 5,000 square feet. These are the spaces that house the backbone of our local economy: HVAC contractors, custom fabricators, last-mile delivery hubs, and specialty suppliers.
Here is why we view Small Bay as the premier investment opportunity in the current landscape:
1. The Unbuildable Asset (Supply Scarcity) This is the single biggest driver of value. Today, with current land and construction costs, it is nearly impossible for developers to build new small bay facilities profitably. They simply cannot charge high enough rent to justify the construction.
The Result: We have a fixed supply of these buildings. When demand rises (which it is), there is no relief valve of new construction. This drives rents upward and keeps vacancy historically low—currently averaging under 4% nationally, nearly half that of Big Box industrial.
2. The "Aggregator" Advantage Owning a single-tenant building is binary: you are either 100% occupied or 100% vacant. Small Bay assets are diversified. If you own a 20-unit building and one tenant leaves, you are still 95% occupied. This "portfolio in a box" reduces cash flow volatility.
3. Inflation Protection Unlike large corporate leases that lock in rates for 10 years, Small Bay leases are typically 1 to 3 years. This allows landlords to reset rents to market rates frequently. In a world where inflation and market dynamics shift quickly, this agility is a massive competitive advantage.
The Bottom Line While the institutional money chases the massive warehouses on the outskirts of town, the real value is being generated in the infill locations where business actually happens. Small Bay logistics offers higher rent growth, better diversification, and an irreplaceable location advantage.
If you are looking to diversify your real estate exposure away from the volatility of single-tenant assets, let's discuss the opportunities we are seeing in the Small Bay sector.
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Need a roadmap? Reply in the comments section or send us an email for assistance. 360 Perspective Partners offers Professional Licensed Business, Commercial and Investment Brokerage Services along with providing Professional Licensed Community Management Services in Central Florida: https://my360perspective.com/
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