Small-Bay Industrial Deal Activity.
Transaction-level analysis of small-bay sales across South Florida. The premium has widened. Here's what's driving it — and the four deals we tracked closest this quarter.
Transaction-level analysis of small-bay sales across South Florida. The premium has widened. Here's what's driving it — and the four deals we tracked closest this quarter.
Small-bay industrial — multi-tenant flex and warehouse from 5,000 to 25,000 SF — has been quietly outperforming the headline industrial segment for six straight quarters. The cap-rate premium to big-box (200k+ SF) institutional product widened to 40 basis points in Q1 2026, up from 25 bps a year ago and the widest reading in our dataset since we began tracking the spread in 2021.
The conventional wisdom on this has been wrong twice over. First, the assumption that small-bay would eventually compress to big-box as institutional capital "discovers" the segment. Second, the assumption that the operating-intensity overhead of multi-tenant small-bay would always cap the price the segment could clear. Both have failed to play out — for structural reasons we believe are durable.
Three structural reasons keep small-bay trading at a durable premium:
Average small-bay pricing across our 47 tracked Q1 transactions reached $238/SF, up 6.3% year-over-year. The headline number masks meaningful submarket dispersion: Palm Beach pricing pushed past $260/SF on three closed deals, while Treasure Coast pricing remained closer to $180/SF.
| Submarket | Median $/SF | Top Quartile | Tracked Deals (Q1) | YoY Change |
|---|---|---|---|---|
| Palm Beach — Lake Worth / Boynton | $258 | $278 | 12 | +8.4% |
| Miami-Dade — Doral / Hialeah | $252 | $285 | 14 | +6.8% |
| Broward — Pompano / Deerfield | $232 | $251 | 11 | +5.2% |
| Palm Beach — Riviera / West Palm | $214 | $236 | 6 | +7.1% |
| Treasure Coast — Stuart / PSL | $182 | $202 | 4 | +9.2% |
| Tri-County Average | $238 | $264 | 47 | +6.3% |
Four transactions we tracked most closely this quarter — selected to illustrate the dynamics we're seeing across the segment. Names anonymized, but the structures and economics are real.
Family-trust seller after 28 years of ownership. Below-market rents across the rent roll. Buyer underwrote a 2-year mark-to-market plan.
Owner-occupier sale-leaseback. 10-year NNN with 3% annual escalators. Investor-grade tenant credit. Tight-cap institutional bid.
2021 vintage acquisition by an out-of-state sponsor. Maturing debt the seller couldn't refinance at original terms. Discount to 2023 valuation.
Portfolio sale by a retiring local developer. Mark-to-market upside on roughly 60% of the rent roll. Strong submarket fundamentals.
"Three of the four highest-cap-rate trades involved a forced-seller dynamic. That's not distressed. That's opportunity — when the next owner is patient and well-capitalized."
Total small-bay transaction volume across South Florida reached $197M in Q1, up 18% from Q4 2025 but still 22% below the Q1 2022 peak. The volume increase is being driven by private capital and family-office buyers — institutional capital remained roughly flat QoQ.
| Buyer Type | Q1 '26 Volume | Share | QoQ Change | YoY Change |
|---|---|---|---|---|
| Private capital / family office | $98M | 50% | +28% | +42% |
| Local syndicator / operator | $48M | 24% | +22% | +18% |
| Institutional fund / REIT | $32M | 16% | +2% | −14% |
| Owner-occupier | $19M | 10% | +8% | +6% |
| Total | $197M | 100% | +18% | +11% |
Private capital is now the marginal buyer in our segment. That's a buyer pool that values relationships and certainty of execution over price. Our broker network can deliver both — and we expect to see more proprietary deal flow from relationship-driven origination through the back half of 2026.
Our base case for small-bay over the rest of 2026:
Transactions are tracked via a combination of Real Capital Analytics, public county records, broker dialogue, and Maco proprietary deal monitoring. We include only arm's-length sales between unrelated parties. We exclude portfolio sales where the small-bay component cannot be cleanly attributed.
Submarket categorization follows standard CoStar geography. Submarkets with fewer than three tracked deals in any quarter are excluded from medians but included in aggregated totals.
Disclaimer. This report is for informational purposes only and does not constitute investment advice, a solicitation, or an offer to buy or sell any security or interest. Specific deal details are anonymized and may be representative composites. Forward-looking statements are based on Maco Equity Partners' current views and are subject to risks and uncertainties. Past performance is not indicative of future results.
Prepared by Maco Equity Partners Research. Inquiries: rmac@macoequitypartners.com · macoequitypartners.com