Q2 2025 Light Industrial Market Update: A Compelling Story for Small-Bay Fundamentals

Newport Beach, CA — July 22, 2025 — BKM Capital Partners has released its Q2 2025 Light Industrial Market Update, highlighting continued resilience and outperformance in the U.S. light industrial real estate sector. The report specifically notes historically strong rent growth, a tightening development pipeline, and enduring demand for small- and mid-bay assets across major U.S. markets as significant factors—fundamentals not seen across the larger size segments.

From 2020 to 2023, cumulative industrial rent growth across the top 25 U.S. metros averaged 70%, with Miami leading significantly at a 108% increase. With this robust growth becoming the defining factor of the sector's mid-pandemic performance, an opportunity for further value creation now emerges as leases come to expiration significantly under-market. This market inefficiency reflects a unique opportunity for operators like BKM who can act swiftly to capture value withheld during periods of rapid growth and expansion.

Other notable sector fundamentals place small-bay assets as top performers amongst their larger counterparts, including a lack of construction in the small-bay segment, leading to sub-5% vacancy for the product type. This, coupled with macroeconomic tailwinds, positions light industrial assets for continued success during a time when many others may be struggling.

“As secular forces like e-commerce, reshoring, and manufacturing reinvestment continue to reshape supply chains, demand for functional, infill industrial assets is only intensifying,” said Brian Malliet, Founder, CEO, and CIO of BKM Capital Partners. “Our strategy remains focused on small-bay properties in supply-constrained, high-growth markets where we can deliver operational excellence and long-term value.”

The report also profiles Houston, where economic and population growth—combined with corporate expansions by companies like Tesla and Apple—are driving demand for sub-50K SF space. Vacancy in this segment remains tight at just 4.2%, further underscoring the market’s strength.

BKM expects the sector to continue benefiting from long-term trends that favor smaller, flexible industrial formats—particularly well-located assets that offer tenants strategic access to labor, transportation networks, and end consumers.

To download the full Q2 2025 Light Industrial Market Update, visit https://content.bkmcapitalpartners.com/q2-market-update.