Small-scale industrial properties continue to outperform the broader industrial sector, emerging as one of the most resilient and in-demand asset classes amid evolving supply chains, shifting consumer expectations and the growth of urban logistics. According to Yardi Matrix’s November National Industrial Report, facilities under 100,000 square feet — typically serving local distributors, last-mile delivery operators and light manufacturers — are positioned for steady growth in the coming years.
Same-day and last-mile delivery services increasingly require smaller, urban infill locations close to consumers, while the reshoring of manufacturing is expected to sustain demand for flexible, well-located facilities. However, developers face challenges delivering new supply due to high land costs and zoning restrictions that make infill projects difficult to execute. To meet demand, they are turning to creative solutions, including converting obsolete office and retail centers into industrial use.
Despite a broad slowdown in new construction, small-scale industrial development has remained consistent. Through the first three quarters of 2025, 340 facilities under 100,000 square feet broke ground — a 16% increase over the same period last year.
National in-place rents for industrial space averaged $8.73 per square foot in October, up slightly from the previous month and 5.7% higher than a year ago. Miami led the nation in rent growth, with in-place rents rising 8.9% over the past 12 months. The city’s strong rental performance is driven by the Port of Miami’s role in trade with Latin America and the Caribbean, as well as by Florida’s population growth.
More than 19 million square feet of new, high-quality space have been delivered in Miami since 2022, pushing up rents as tenants sign premium leases. The current vacancy rate in the market stands at 11.2%, although only 2.1 million square feet of new space is under construction or about 1% of total stock.
Nationally, the industrial vacancy rate reached 9.6% in October, up 240 basis points from last year, reflecting the impact of a recent supply boom. Meanwhile, the gap between new lease rates and in-place rents continues to shrink; leases signed over the past 12 months averaged $9.85 per square foot, only $1.12 above the national in-place rate, down from a $2.08 spread last October.
Across the country, 352.9 million square feet of industrial space, or about 1.7% of total stock, are currently under construction, while 247.5 million square feet have been completed through October, the report said.
Industrial transactions totaled $61.8 billion this year, with properties averaging $136 per square foot. Notably, buildings under 100,000 square feet saw a 10.6% year-over-year increase in sale price, significantly outpacing larger properties, which grew just 3.5%.
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