Recent research from CBRE highlights continued strength in multi-tenant shallow-bay industrial real estate, a segment that has remained supply-constrained despite strong and consistent tenant demand. While much of the industrial development pipeline over the past decade has focused on large logistics and distribution facilities, smaller multi-tenant industrial properties have seen comparatively limited new construction.
According to CBRE’s report, CBRE Group “Shallow-Bay Industrial Availability Remains Tight Amid Strong Demand,” structural supply constraints and evolving tenant needs continue to support occupancy levels and rent growth across many U.S. markets.
These market dynamics align closely with Avistone’s long-standing investment focus on acquiring and operating multi-tenant shallow-bay industrial properties that offer the potential for both stable income and long-term appreciation.
Key Insights from CBRE Research
CBRE’s analysis highlights several trends supporting the ongoing strength of shallow-bay industrial:
Limited New Supply
Over the past decade, most new industrial development has focused on large-format distribution centers. As a result, smaller multi-tenant industrial buildings remain relatively underbuilt compared to tenant demand.
Aging Inventory Creates Opportunity
A significant portion of existing shallow-bay inventory was constructed prior to 2000. Older assets often present opportunities for renovation, modernization, and operational improvements that can enhance competitiveness and leasing performance.
Consistent Demand from Local Businesses
Shallow-bay industrial space is widely utilized by service providers, light manufacturers, technology users, logistics support businesses, and other local and regional companies that require flexible, functional space configurations.
Rent Growth Supported by Supply Constraints
Limited new construction combined with steady tenant demand has contributed to consistent rent growth in many markets.
Barriers to New Development
Higher land costs, zoning challenges, and developer focus on larger institutional assets have limited the amount of new shallow-bay construction in many markets, contributing to ongoing supply constraints.
Alignment with Avistone’s Investment Strategy
Avistone’s investment strategy is specifically focused on acquiring multi-tenant shallow-bay industrial properties that can benefit from these structural market dynamics.
Our approach emphasizes:
We believe these characteristics position shallow-bay industrial assets to potentially provide durable income and operational upside across market cycles.
Recent Example: Pike Center Acquisition
Avistone’s recently acquired Pike Center property in the Atlanta market reflects this strategy in action.
Pike Center is a 96,315 square-foot multi-tenant shallow-bay flex industrial business park featuring a diversified tenant base and functional suite configurations designed to serve a wide range of local businesses. The property was acquired below estimated replacement cost and offers opportunities to enhance value through targeted capital improvements, leasing execution, and operational efficiencies.
By focusing on properties with strong underlying fundamentals and identifiable value-add opportunities, Avistone seeks to position assets for improved occupancy, increased cash flow stability, and long-term appreciation potential.
Current market data suggests that shallow-bay industrial properties continue to benefit from structural supply constraints and consistent demand from a diverse range of tenants. With a large percentage of existing inventory built prior to 2000 and limited new development in the pipeline, opportunities may exist to improve functionality, enhance competitiveness, and support rent growth over time.
While acquisition pricing remains competitive, disciplined investment strategies focused on operational execution and thoughtful capital improvements may be well positioned to benefit from the sector’s long-term fundamentals. CBRE’s research highlights why many investors continue to view multi-tenant shallow-bay industrial as an attractive component of a diversified real estate portfolio.