Tampa businesses looking for a smaller warehouse, workshop or industrial building are running into a market where demand has stayed high, relatively little new space has arrived and rents have kept climbing. That combination has now pushed Tampa ahead of every other major U.S. market in a new ranking of small-bay industrial performance.
CoStar ranked Tampa No. 1 among the 54 largest U.S. markets after comparing leasing activity, vacancies, new inventory and rent growth across smaller industrial properties. Tampa finished first for rent growth and third for growth in leasing activity, with businesses still taking space at a pace substantially above what the market saw before the pandemic.
Much of that demand is coming from companies that need a loading door and a relatively small industrial space rather than a million-square-foot distribution center. Construction contractors, manufacturers, logistics companies and service businesses have kept leasing Tampa’s small-bay spaces, according to CoStar, with the strongest interest landing on smaller, newer buildings.
Supply has not kept up. Tampa has added relatively little small-bay industrial space compared with competing Sun Belt markets, leaving tenants chasing a limited pool of buildings even as the larger industrial market cools. “The strongest tenant interest remains concentrated in smaller, newer industrial buildings,” said Juan Arias, national director of industrial analytics at CoStar Group, adding that developers have increasingly shifted toward smaller projects as demand for large speculative buildings cools.
CoStar built the ranking from four measures: leasing activity in spaces smaller than 50,000 square feet, vacancy changes in 10,000- to 100,000-square-foot properties, inventory growth among buildings no larger than 100,000 square feet and asking-rent growth. The analysis compared recent performance with pre-pandemic levels dating to 2015.
National industrial fundamentals have weakened as the wave of warehouse construction that followed the pandemic meets softer demand. Smaller buildings have held up better, CoStar found, particularly in markets where population growth and new businesses are competing for scarce infill space.