A recent CoStar report highlights a shift in demand toward older big-box industrial properties. Demand in the U.S. bulk industrial market is beginning to extend beyond the newest generation of warehouses.
Key Takeaways
- Bulk industrial demand is extending beyond the newest generation of warehouses.
- Vacancy among properties larger than 500,000 square feet declined in Q2.
- Mid-sized distribution properties still face elevated vacancy, and discounted sublease space keeps landlord competition high.
Demand in the U.S. bulk industrial market is beginning to extend beyond the newest generation of warehouses.
Older Big-Box Properties See Renewed Interest
While newer facilities continue to capture most leasing activity, larger properties built more than six years ago are seeing renewed tenant interest. In Q2, vacancy among properties larger than 500,000 square feet declined, signaling improving occupancy across some of the largest industrial properties in the country.
Mid-Sized Distribution Space Still Faces Headwinds
Mid-sized distribution properties, however, continue to face elevated vacancy. Meanwhile, tenants have more options, including discounted sublease space, keeping competition among landlords elevated.
What This Means for Owners and Occupiers
For property owners and occupiers, the shift highlights an evolving industrial market where building size, location, functionality, and lease economics remain important factors when evaluating opportunities. Tenants comparing options can benefit from tenant representation that weighs these factors against current market conditions.
Looking for industrial space or guidance on your portfolio in Arizona? Connect with the team at SVN | Desert Commercial Advisors to discuss your next move.
FAQ
Is demand increasing for older big-box industrial space?
Yes. According to CoStar, larger properties built more than six years ago are seeing renewed tenant interest, even though newer facilities still capture most leasing activity.
What happened to vacancy in 500,000+ SF warehouses?
Vacancy among properties larger than 500,000 square feet declined in Q2, pointing to improving occupancy in some of the largest industrial buildings.
Why is competition among industrial landlords still high?
Mid-sized distribution properties still carry elevated vacancy, and discounted sublease space gives tenants more options.
