Micro-bay industrial platform Portal Warehousing and alternative asset management solutions provider GCM Grosvenor have partnered to acquire value-add industrial properties and provide flexible, small-scale industrial space to a structurally undersupplied segment of the market.
The partnership with GCM Grosvenor, which has $91 billion of assets under management, marks the next phase of Portal's growth, providing institutional backing to scale nationwide. GCM Grosvenor also joins Portal's Board of Directors.
The venture will focus on infill industrial properties in key logistics hubs and repositioning them into right-sized, turnkey warehouse suites designed for the operational needs of small and mid-sized businesses (SMBs), e-commerce operators and enterprise users.
Portal's approach enables companies to enter new markets quickly without long-term leases or major build-outs and capital expenditures. Using short-term license agreements, all-inclusive pricing and embedded logistics support, tenants receive flexible terms, predictable costs and move-in-ready space.
Every Major Market Has a Waitlist
Every major market in the country has a wait list of businesses that need a small warehouse, not a 10,000-square-foot commitment, not a self-storage unit, "but a high-quality, functional space to work and operate from," Alex Morrison, CEO of Portal Warehousing, told GlobeSt.com.
"Micro-bay industrial has been one of the most underserved categories in commercial real estate for years, and the businesses that need it most, small businesses, e-commerce operators, and enterprises, have had almost nowhere to go. Partnering with GCM Grosvenor gives us the capital to meet that demand at scale in every market we enter."
Portal currently owns and/or operates over 286,000 square feet, comprising more than 300 warehouse suites across six markets, with additional locations under development.
Micro-bay industrial, defined as warehouse space under 5,000 square feet, is smaller than the typical size range of small-bay industrial (5,000 to 10,000 or more square feet) and addresses a structural supply-and-demand imbalance in the market.
The national vacancy rate for industrial space under 5,000 square feet is 4.4%, making it an underserved market, according to Portal.
Meanwhile, the continued rise of e-commerce, the onshoring of supply chains and the expansion of the small-business economy are intensifying demand for infill logistics space. Portal warehouse suites range from 200 to 2,500 square feet.
Addressing a Longstanding Gap
Alex Redfearn, founder, president and CEO, Redfearn Capital, told GlobeSt.com that micro-bay industrial is gaining traction because it addresses a longstanding gap in the industrial market.
"Across many infill logistics markets, particularly in high-growth regions like the Southeast, smaller businesses need functional warehouse space close to population centers," Redfearn said.
"As population growth and last-mile logistics continue to reshape industrial markets, this segment is becoming an increasingly important part of the industrial ecosystem."
Juan Arias, national director of U.S. Industrial Analytics at CoStar Group, told GlobeSt.com that small-bay properties of less than 50,000 square feet, which house most small-warehouse tenants occupying sub-10,000-square-foot spaces, have the lowest availability rate (approximately 5%), while larger property segments feature thresholds above 7%.
With over 80% of leasing activity across most markets in the country composed of sub-20,000-square-foot leases, "this remains the most active and largest tenant pool in industrial real estate," Arias said.
"New small-bay construction tends to be farther from the denser areas in a market, making infill small-bay industrial space an increasingly unique space market," he said.
Companies such as Portal take on the leasing risk and the workload of managing multiple smaller tenants, while signing just one larger lease with the property's landlord, Arias said.
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