Small Industrial Spaces Are in Short Supply Across the US. Here’s Where They Are Scarcest.

Smaller industrial properties have maintained impressive occupancy rates and rising rents for several years, and in recent months they have increasingly stood out as one of the best-performing categories of commercial real estate.

Other property types typically favored by investors, namely luxury apartments and big-box distribution centers, are facing headwinds as the large amount of new development started during the pandemic reaches completion in record numbers, helping to drive up vacancy rates.

In contrast, the recent outperformance of smaller industrial properties owes mainly to their insulation from supply-side risk. Securing land and entitlements for industrial projects near most major cities is challenging and few developers are willing to invest the time needed to clear these hurdles unless the projects involved and the corresponding payouts for completing them are large...