Small bay industrial real estate is quickly emerging as one of the most profitable and overlooked investment opportunities in today’s market. While traditional sectors like office, retail, and multifamily face ongoing challenges, this niche is quietly delivering strong returns and attracting smart investors. In this episode, we sit down with Austin Edelmon, a commercial real estate expert specializing in small bay industrial complexes, to break down why this asset class is gaining momentum and how investors can take advantage of it.

Meet Austin Edelmon

Austin Edelmon has over 20 years of experience in commercial real estate, focusing specifically on small bay industrial investments. His work spans across the United States, where he helps investors acquire, develop, and scale portfolios within this growing sector. 

His team primarily works with individual investors, investment groups, and funds that are looking to diversify into higher-yield assets. Their main focus is on small bay industrial complexes, which are clusters of metal buildings divided into multiple small units that are commonly found on the outskirts of cities.

What Are Small Bay Industrial Buildings?

Small bay industrial buildings are multi-unit commercial properties that are typically constructed using metal materials. These properties are designed to accommodate small businesses, contractors, and service providers that require a combination of workspace and storage. Common tenants include contractors, automotive businesses, small logistics operations, and local service providers. 

These properties usually consist of multiple small units with flexible layouts, and in some cases, they may also include optional yard space that can be used for storage or operational purposes.

Why This Asset Class Is Outperforming Traditional Real Estate

Small bay industrial properties are outperforming traditional real estate due to several key advantages. They often generate higher rental yields, allow for greater flexibility in pricing, and benefit from strong and consistent demand from small businesses. As a result, many investors are shifting away from struggling sectors such as office and retail and moving toward industrial assets that demonstrate more stable and reliable performance.

Another major advantage is the lower barrier to development. Compared to large commercial projects, small bay industrial developments are simpler to construct, often using pre-engineered metal building systems. This approach reduces construction costs compared to masonry or concrete structures and allows projects to be completed more quickly, making it more accessible for new investors entering the market.

Zoning restrictions are also generally more favorable for this type of development. Many small bay industrial projects are built in county areas outside of dense urban centers, where zoning regulations are less restrictive, land is more affordable, and approval processes tend to move faster. This combination helps reduce both risk and complexity for developers.
In addition, demand from small businesses continues to strengthen this asset class. These tenants value spaces that combine workspace and storage in one location, allowing them to operate efficiently while maintaining flexibility. This practical use case keeps occupancy rates strong and ensures ongoing demand for these types of properties.

Development Strategy: How Investors Get Started

Austin explains that the development process typically begins with land acquisition followed by a thorough feasibility analysis. Investors first evaluate key factors such as population growth, household income levels, business density, and overall market demand to determine whether a location is suitable for development. Once a site is selected, a test fit and planning phase is conducted, during which a layout is designed to determine the number of buildings, total square footage, and unit configuration that the property can support. After this stage, financial modeling is performed through a pro forma analysis that estimates rental income, operating expenses, and potential exit value. This process allows investors to determine whether the project is financially viable before committing to development.

Build or Hold: What’s the End Goal?

Investors in small bay industrial real estate typically follow one of two primary strategies. The first is a build-and-sell approach, where the investor develops the property, leases it to stabilize income, and then sells it for profit. 

The second is a build-and-hold strategy, where the investor retains ownership of the property to generate long-term rental income while continuing to grow a portfolio over time. Many investors begin with smaller projects and gradually scale into larger developments as they gain experience and confidence in the space.

The Power of Simple Improvements

Even small upgrades can have a meaningful impact on both property value and performance. Improvements such as repainting exterior surfaces, updating unit doors, and enhancing lighting and security systems can significantly improve the overall appearance and functionality of the property. 

These enhancements can help increase rental rates, attract higher-quality tenants, and ultimately boost overall property performance, making them a cost-effective way to improve returns.

Why Investors Are Paying Attention Now

The commercial real estate landscape has shifted significantly in recent years, particularly following the pandemic. Traditional sectors such as office and retail have faced ongoing challenges, while industrial and flex space assets have continued to grow in demand. Small bay industrial real estate sits at the center of this shift, offering stability, scalability, and strong long-term demand. As more investors recognize these advantages, this asset class is becoming an increasingly important part of modern real estate investment strategies.

Exploring the Future of Small Bay Industrial Real Estate

Small bay industrial real estate continues to stand out as a powerful and often underappreciated segment of the commercial property market. With its combination of strong demand, flexible development options, and attractive returns, it has become an increasingly popular choice for investors looking to diversify beyond traditional asset classes like office, retail, and multifamily. As more investors recognize the advantages of this space, from lower barriers to entry to scalable growth potential, it’s clear that small bay industrial buildings are playing a growing role in shaping modern real estate investment strategies.

For those who want to learn more about real estate investing, Dwanderful is a real estate investing platform and podcast hosted by Dwan Bent-Twyford. The platform is designed to educate, inspire, and guide both new and experienced investors through practical insights and real-world strategies. Visitors can explore valuable resources, including Dwan’s free book Real Estate Lingo and her paid book Five Pillars of Real Estate Investing, both aimed at helping simplify complex real estate concepts and build a strong foundation in investing.

In addition, Dwanderful features an interactive quiz game where visitors can discover how they could potentially generate six figures in the next six months, whether they are purchasing their first property or expanding their current portfolio. The quiz takes less than a minute to complete and provides a quick, personalized way to explore what’s possible.
With that in mind, let’s return to Dwan Bent-Twyford as she continues the conversation with today’s guest. Contact us now