Look Beneath the Surface in Industrial Real Estate

At a high level, recent industrial headlines suggest the market is slowing across the Carolinas.

But the reality is more nuanced.

What we’re seeing is less a broad-based slowdown and more a separation between product types, locations, and tenant demand profiles. In particular, demand for shallow bay industrial continues to stand out across many Southeast markets.

Over the last cycle, much of new industrial development focused on scale—larger buildings, larger users, and regional distribution facilities. At the same time, demand continued building in smaller, more flexible spaces serving local and regional businesses.

Today, that segment remains relatively constrained in many markets.

Where Demand Continues to Build

The underlying drivers of industrial demand across the Carolinas remain strong.

South Carolina was among the fastest-growing states in the country in 2025, while North Carolina continued adding population at a meaningful pace. That growth fuels local economic activity—supporting contractors, suppliers, service businesses, and last-mile distribution users that require functional, well-located industrial space.

At the same time, supply chains have become more localized and more fragmented. Many companies are operating closer to customers, carrying more inventory, and using multiple smaller facilities rather than a single centralized hub.

We continue to see this reflected in leasing activity across our portfolio: consistent demand for practical, flexible industrial space that supports day-to-day operations.

What We’re Seeing Across Markets

This dynamic is playing out across multiple markets—but in different ways.

In Greenville/Spartanburg, demand is supported by a deep and established manufacturing base. Leasing activity in the broader market exceeded 12 million square feet in 2025, supported by one of the Southeast’s strongest supplier ecosystems. These users continue to drive demand for flexible space close to production centers.

Wilmington presents a different—but equally compelling—profile. The metro grew by approximately 2.6% in 2025 while industrial inventory remained relatively limited. That combination has created a tighter supply environment, where even incremental demand can place meaningful pressure on rents and availability.

Different drivers. Similar outcome: continued demand for shallow bay industrial space.

Why Supply Remains Constrained

There’s often an assumption that new development will eventually close the supply gap in smaller-bay industrial product.

Over time, additional supply will likely come online. But in many markets, closing that gap quickly may prove challenging.

Land costs remain elevated, construction costs continue to fluctuate, and smaller-bay projects can be more difficult to deliver economically—particularly in infill locations where land availability is increasingly limited.

As a result, existing shallow bay inventory—much of it built decades ago—continues to play an important role, especially when located near population centers and established industrial corridors.

That dynamic creates opportunities both for thoughtful repositioning of existing assets and for selective new development where market conditions support it.

Looking Beyond Headline Vacancy Numbers

At a high level, some industrial markets appear softer today than they did several years ago.

But broad vacancy statistics often mask meaningful differences between product types.

In many markets, recent softness has been concentrated in larger-bay deliveries that entered the market simultaneously. Meanwhile, smaller, infill-oriented spaces often remain relatively constrained.

The market can look very different once you move below the headline numbers.

This Isn’t a Niche—It’s Core Infrastructure

Shallow bay industrial is sometimes viewed as a secondary segment of the industrial market.

In practice, it supports many of the businesses that local economies depend on every day—contractors, suppliers, distributors, and service providers operating close to their customers.

Across many Southeast markets, that space remains difficult to replace quickly.

Final Thought

Some of the most durable real estate opportunities emerge in segments that receive less attention during broader market cycles.

Across the Carolinas, shallow bay industrial continues to stand out as one of those areas.

It’s a trend we’ve been watching closely—and continuing to build into thoughtfully.