Investing in Small-Bay Industrial: The Underrated Power Play in Industrial CRE

RAI Commercial Group
5 days ago
3 min read

Adaptability beats scale in today’s logistics race. Small-bay assets win by design, not default.

E-commerce didn’t just disrupt retail—it reengineered how the entire economy moves. What started as a convenient click-to-cart alternative is now a trillion-dollar engine driving everything from global supply chains to how we use space, time, and capital.

For commercial real estate, that shift has meant one thing above all: skyrocketing demand for industrial space. But here’s what most headlines miss. While the mega-warehouses and fulfillment giants soaked up attention during the early waves of e-commerce growth, it’s the smaller, more agile industrial assets—small-bay facilities under 250,000 square feet—that are quietly outperforming the broader market. And savvy investors are paying attention.

The New Logistics Math: Why E-Commerce Needs MORE Industrial, Not Less

E-commerce requires up to three times more warehouse space than traditional retail. That demand isn’t easing anytime soon. Global online retail is projected to surpass $8 trillion by 2028. And with consumers expecting same-day or next-day delivery, the real estate playbook has shifted hard toward localized, nimble logistics.

That’s where small-bay industrial comes in. These properties, often tucked into infill submarkets near dense population zones, are essential to last-mile delivery strategies. Unlike the oversized regional hubs that dominate headlines, these smaller facilities offer what today’s supply chain needs most: speed, proximity, and flexibility.

Small-Bay, Big Advantage

Let’s talk about why these assets are punching above their weight.

Location is the lever. Urban last-mile delivery volume is expected to increase 78% by 2030. That puts pressure on companies to find warehousing solutions closer to customers. Small-bay properties are often the only viable option in dense, urbanized zones.
Scarcity creates strength. New development of small-bay product is constrained by land scarcity, rising construction costs, and tougher zoning. That translates to persistently low vacancy rates and strong rent growth—even when macro conditions cool.
Demand is diversified and sticky. Today’s tenant base spans 3PLs, omnichannel retailers, service providers, and light manufacturers. They’re less concerned about size and more focused on access and adaptability. That kind of tenant mix builds long-term resilience into a portfolio.

The Tech Tailwind

The rise of automation, AI, and micro-fulfillment tech is making small-bay industrial even more relevant. These facilities offer the footprint flexibility needed to test, integrate, and scale emerging logistics tech—without the operational drag of retrofitting a million-square-foot box.

And then there’s sustainability. ESG-forward tenants increasingly seek energy-efficient and carbon-conscious spaces. Smaller infill facilities are easier to upgrade and electrify, making them attractive to occupiers and investors alike as green requirements tighten.

Looking Ahead: Investing in Small-Bay Industrial

While the spotlight still shines on large-format industrial, the fundamentals tell a different story. Oversupply and rising vacancy are catching up with the big-box sector. Meanwhile, small-bay industrial is staying tight, competitive, and essential, making investing in small-bay industrial a smart move.

If you’re an investor looking for smart positioning in a shifting logistics landscape, small-bay might be your edge. It’s where demand is steady, supply is limited, and strategic value keeps climbing.

BOTTOM LINE: Small-Bay Is The Smart Play

The logistics arms race isn’t slowing down—it’s evolving. And the winners will be those positioned to deliver speed, efficiency, and resilience in real time. That’s why small-bay industrial is more than a niche—it’s a cornerstone of the new supply chain economy.

RAI Commercial Group is actively tracking high-performing small-bay opportunities across the Houston MSA, with a sharp eye on undersupplied submarkets like Montgomery County. If you’re building a portfolio for cash flow and long-term relevance, let’s talk.

READY TO INVEST WHERE GROWTH IS HAPPENING?

At RAI Commercial Group, we help investors capitalize on this momentum—by identifying the right properties, navigating local dynamics, and structuring deals that align with both short-term cash flow and long-term portfolio strategy. Our focus on high-growth submarkets like East Montgomery County ensures you’re not just in the game—you’re ahead of the curve.

Whether you’re an investor, developer, or end-user, the window to get in early is still open—but it’s narrowing.

Want to know where we see deal flow heating up next? Book a strategy call here.

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Written by RAI Commercial Group