Small-Bay Industrial: The Asset Class Institutions Just Discovered
Small bay industrial flex space has held under 3% vacancy nationwide for three consecutive years. Some major markets have no available inventory at all. One of AAA's Texas projects delivered a 1,300% IRR. And most commercial real estate investors have never even heard of this asset class.
If you are an accredited investor looking for where serious capital is moving in 2026, this episode is for you.
Paul Bennett, who has been developing small bay industrial since 2011, answers the nine questions investors are asking right now: what this asset class actually is, why supply is structurally constrained, how AAA underwrites to a 10.5% yield on cost, why a $12M project can stabilize at $21M in value, how triple net leases protect investors from rising property taxes and insurance, and how small bay pairs with self-storage inside Growth Fund 2 to give investors diversification across two product types and four markets in a single investment.
Next episode: AAA's Shawn Beichler walks through design, construction, and lease-up on a live project.
Ready to talk about your investment strategy? Reach out at aaastorageinvestments.com
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Chapters
(00:00) Why Small Bay Industrial Is Outperforming Every Asset Class Right Now
(01:00) What Industrial Flex Actually Is and Who Leases It
(03:10) Sub-3% Vacancy and Critically Low Inventory in Major Markets
(06:30) Why a $12M Project Is Worth $21M at Stabilization
(09:00) How Triple Net Leases Protect Investors From Rising Costs
(12:00) Why This Tenant Base Is More Recession-Resilient Than You Think
(18:57) AAA's Turnkey Build-Out Model and Why It Fills Space Faster
(25:04) How Self-Storage and Small Bay Work Together in Fund 2
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