Stokley CRE Intelligence · Asset class
A structured view of the developments shaping flex and small-bay industrial, and the situations those developments may create for owners, lenders and investors.
In short
Small-bay industrial is the tightest part of the industrial market in 2026. CRE Daily, citing Q2 2026 research, put small-bay vacancy at about 4%, 47% below the rest of industrial, with buildings under 50,000 square feet trading at $147 per square foot against $108 for larger formats. New supply is scarce, so well-run buildings do well, while older buildings, partly vacant multi-tenant properties and big-box-to-small-bay conversions can still need short-term capital.
Current signals
~4%
CRE Daily · Q2 2026
36%
CRE Daily · $147 vs $108 PSF
83%
CRE Daily
-61%
Savills via CRE Daily
Sourced market view · 01
Small tenants are carrying industrial demand. CRE Daily reported that multi-tenant light industrial led the U.S. industrial market in Q2 2026, and that roughly 70-80% of industrial leases cover spaces under 50,000 square feet, even though those buildings are only about 31% of inventory. Small-bay vacancy averages about 4%, well under big-box space, where WareCRE puts national vacancy near 7.4%.
Sourced market view · 02
The wider industrial market turned. Net absorption passed new deliveries in Q2 2026 for the first time since 2022, according to CRE Daily's summary of Newmark research, and investors followed. Small-bay buildings now trade at a clear premium to larger formats, while the construction pipeline sits 61% below its 2022 peak, per Savills.
Sourced market view · 03
Developers rarely build small-bay because one big tenant is simpler than forty small ones, so most of the stock is old. CRE Daily notes 83% of small-bay inventory was built before 2000. That keeps good buildings full, but it also means many assets need roofs, power, loading or code work, and a strong sector average doesn't settle an individual building's refinance.
Stokley analysis
We underwrite small-bay building by building. We look at the tenant roster and how often it turns over, lease terms and collections, clear height, loading and power, building condition and deferred work, and what it would take to re-lease a unit. A partly vacant or older multi-tenant building with a credible leasing and capex plan can be a good real estate loan, even when a bank wants to see it stabilized first.
Opportunity lens
Multi-tenant buildings with units still to lease, or a maturity arriving before occupancy settles.
Older buildings that need roof, power, loading or code work, and big-box or flex space being divided into smaller units.
Buyers of small-bay buildings who need to close faster than a bank can.
Questions answered
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Stokley Capital evaluates $1M–$5M acquisition, refinance, bridge, transitional and rescue situations nationwide. Send us the property, capital need and timeline.