When people talk about the industrial market, everything usually gets grouped together. I think that can be misleading because a 5,000-square-foot industrial building and a 300,000-square-foot warehouse are completely different products. They attract different tenants, have different competition, and can react differently when the overall market changes. This is something I pay attention to a lot when looking at industrial properties in Northern Nevada.
Small-bay industrial is usually made up of spaces used by local contractors, service companies, automotive businesses, distributors, and other smaller businesses. These companies normally do not need a massive warehouse, but they still need things like roll-up doors, yard space, parking, power, and easy access. There also tends to be a much larger number of businesses that can use a smaller space compared to a very large warehouse. That can create a different level of demand.
Another big difference is supply. A lot of the newer industrial development we have seen has focused on larger warehouse and distribution buildings because those projects can be easier to build at scale. Smaller industrial buildings can be harder to develop economically because land, construction, and development costs still have to make sense. That means older small-bay properties can sometimes benefit simply because there is not a lot of new product being built to compete with them.
This does not mean every small industrial building is automatically a great property. Condition, location, access, yard space, power, and the layout of the building still matter a lot. A smaller building that is difficult to use can still sit vacant, while a clean and functional building can attract a completely different level of interest. That is why I think it is important to look at the property itself instead of only looking at overall industrial vacancy numbers.
For owners, the main point is to understand what part of the industrial market your property actually competes in. A headline about industrial vacancy going up does not necessarily mean every industrial property is experiencing the same thing. If you own a smaller industrial property in Northern Nevada and want to know what I am seeing in that part of the market, reach out and I would be happy to compare notes.
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