Small Bay: The Supply That Never Came

By Phil Maisano/ Industrial Storage Brokers/ 29 August 2026

What small bay actually is

Multi-tenant industrial in units of roughly 1,200 to 15,000 square feet. Grade-level loading most of the time, a modest office fit-out at the front, a shared truck court, and anywhere from four to forty tenants in a building.

It is unglamorous, it is management-heavy, and for two decades it was the part of the industrial market that institutional capital walked past. That is exactly why there is so little of it and why the little there is has become difficult to replace.

The record year nobody built for

Leasing of spaces under 50,000 square feet in Broward County reached roughly 2.8 million square feet in 2025, a record, and around 30 per cent up on the year before. That is the demand side, and it is not ambiguous.

The supply side went somewhere else entirely. Approximately 693,000 square feet was under construction in Broward in early 2026 with minimal preleasing, and new supply across the market skews toward larger logistics facilities rather than small-bay product. The building that gets financed is not the building the tenants are queueing for.

The rent picture follows. Broward averaged roughly $17.34 to $17.67 PSF NNN across industrial in the first quarter of 2026, the highest industrial rents in Florida, and the county average reached $17.60 PSF NNN in the second quarter with vacancy stable at 7.3 per cent. Miami-Dade sat at $17.19 PSF NNN. Small units routinely price above those county averages, because the county average includes the big-box space that is actually available.

It is not a South Florida quirk either. In Tampa Bay, tenants looking for 500 to 5,000 square feet face tight availability and very little negotiating leverage, and concessions for tenants under 10,000 square feet remain scarce even while big-box absorption has slowed. The same shape shows up across the state.

Why nobody builds it

The four reasons below decide whether this shortage is a cycle to wait out or a fact to price.

• It costs more per square foot to build. More demising walls, more doors, more electrical services, more restrooms, more parking per foot of building. A 200,000 SF box has one entrance and one tenant. The same footprint cut into thirty units has thirty of everything.
• The land basis kills it. In Broward and Miami-Dade, where industrial land is finished, a developer with a site will build the product with the highest value per acre. That is rarely the one with the most doors.
• Lenders prefer credit. One national tenant on a fifteen-year lease is a financeable story. Thirty local contractors on three-year leases is a harder conversation, even though the second one is arguably more durable.
• It is management-intensive. Thirty tenants means thirty renewals, thirty collections and thirty maintenance calls. Institutional owners did not want that, which is why the product stayed in private hands.

None of those four things are about interest rates or about this cycle. They are about how the product is built and financed, and they will still be true in five years.

Who the tenant actually is

Trade contractors. Electricians, plumbers, HVAC, roofers, pool companies, landscapers. Light manufacturers and fabricators. Boutique distributors and e-commerce operations that outgrew a garage. Marine and automotive service. Medical and dental suppliers.

They have three things in common that make them a better tenant base than their size suggests. They are local, so they do not consolidate operations to another state. They need to be near their customers, so submarket matters more to them than rent does. And moving costs them real money, which shows up as low turnover and high renewal.

The demographic engine behind them is not slowing. Florida's population growth arrives as households, and households generate exactly these businesses. That is why the same pattern appears in Sarasota, in Fort Myers, in Orlando and on the Treasure Coast as well as in the tri-county.

Who is buying it

Three distinct buyers, and they underwrite the same building differently.

• Private and family capital. The traditional owner of this product. Wants durable income, understands the management, and is often already in the market.
• Owner-users. A growing local business that would rather own its unit than keep renewing. They pay for certainty rather than for yield, and on the right building they are frequently the highest bidder.
• Institutional capital, newly interested. Small-bay has been one of the clearer national industrial themes of the last two years, because the supply story is easy to explain and the tenant base is diversified.

Which of the three you want depends on price, on speed and on whether you need to stay in occupation. They are not interchangeable, and running a process that appeals to one of them can quietly exclude the others.

What it means if you own it

• The gap between your contract rents and market rents is usually the biggest number in the valuation. On a building with staggered three-year leases signed across several years, a meaningful share of the rent roll is often below where the market is now. A buyer prices that gap. So should you, before you talk to one.
• Unit mix and rollover schedule do real work. A building where half the leases roll within eighteen months is a different asset from one where they roll over six years, and the difference can be larger than the difference in rent.
• Deferred capital gets found. Roof, paving, power capacity, and any unit that has been dark for a while. It is better to know what a buyer is going to raise before due diligence than during it, because everything discovered late gets priced twice.
• Nothing about the supply picture is about to change. If your reason to sell is that you think the shortage is temporary, the four reasons above say otherwise. Sell because you want the capital, not because you are afraid of the cycle.

What we need to price yours properly

• The rent roll. Unit by unit: tenant, size, rent, term, escalations, options, security deposit.
• The rollover schedule, and which tenants have been in occupation longest.
• Operating expenses, and how they are recovered. Net, gross, modified, and what is actually being billed.
• The building. Year built, construction, clear height, loading per unit, power capacity per unit, sprinkler, parking count.
• Capital history and anything deferred. Roof, paving, HVAC, electrical.
• Zoning and permitted use, and whether any unit is operating outside it.

Phil concludes every valuation himself, after he has seen the building and the rent roll. It costs nothing, there is no obligation to list, and if the answer is that you should hold this asset, that is what he will tell you.