TAG Industrial Watch: October 11, 2025

In late 2020, the economy was in the early stages of reopening, and there were plenty of small industrial tenants that happily renewed their leases for the common five-year term. However, a recent article by Bisnow points out that today, many of those same tenants are requesting shorter lease terms of around three years as their pandemic-era leases expire. The impact of inflation, interest rates, and now tariffs is understandably creating uncertainty among small industrial tenants. Net absorption for industrial properties between 10,000 and 50,000 square feet has contracted each quarter since the start of 2023, and the trend has continued based on early reports of Q3 (CoStar). With this in mind, industrial investors can be proactive by offering leases that meet demand. While longer-term leases are usually preferred, the sudden rise in vacancy rates puts more attention on retaining existing tenants. If landlords can negotiate short-term leases with higher rental rates, it will help to protect the underlying value of their properties.
​