The U.S. industrial market is undergoing a major transformation. Driven by reshoring initiatives and rapid automation, the way that properties are developed, financed, and leased is being redefined.
From the bustling Port of Charleston to the supply-constrained markets of the Bay Area and Seattle, developers and investors face increasing pressure to solve complex supply chain logistics, meet demand for multi-functional facilities, and overcome capital market challenges. These forces are prompting a wave of innovation across the sector.
Reshoring and Automation Are Reshaping the Market
Mounting labor costs overseas, ongoing shipping disruptions, and a growing emphasis on supply chain resilience are accelerating the reshoring movement. But this isn’t a return to traditional industrial development—it demands smarter, tech-enabled infrastructure built for speed, adaptability, and long-term efficiency.
“People are front-loading inventory and looking for space close to population centers,” said Ted Konigsberg, SIOR, president of Infinity Commercial Real Estate in Miami. “It’s not just about speed; it’s about automation and reliability.”
That demand for automation and reliability is also reshaping what tenants expect from the buildings themselves.
“Tenants want safer buildings with wearable sensors, AI-driven systems, and more electrical capacity,” said Simons Johnson, SIOR, president of Lee & Associates Charleston.
Multi-Use, Modular, and Smart Facilities
Modern industrial tenants expect flexibility, speed, and technology-ready spaces as standard.
“Tenants are interested in modular buildouts, AI-driven warehouse management, and spaces they can use for both distribution and light manufacturing,” said Tim Vi Tran, SIOR, president of The Ivy Group in Fremont, California. “We’re even seeing showrooms and R&D in the same space. Flexibility is key.”
In the Bay Area, ceiling heights of 32 to 40 feet are becoming the norm, while older stock is being retrofitted for robotics, EV fleets, and renewable energy systems.
According to CBRE’s 2025 Industrial & Logistics Report, 62% of industrial tenants now seek ceiling clear heights of 32 feet or more—signaling a shift toward automation-compatible design across the country.
Capital Constraints and Site Challenges
Financing new development is one of the biggest hurdles today, especially in California. Power upgrades essential for automation-heavy tenants can run as high as $100,000 for just 100 additional amps, often with permitting delays of more than a year.
“It’s very hard to get projects built,” Tran said. “We looked at a six-acre site in Fremont—it’s right under PG&E power lines. Great location, but unusable. And even when you do have a viable site, PG&E can take six months just to show up, and it’ll cost you $5,000.”
Florida faces similar slowdowns, says Konigsberg. Lending has tightened, forcing developers to rethink both scale and flexibility.
“You used to be able to finance anything,” he said. “Now, unless you’ve got a Fortune 500 tenant lined up, banks won’t touch you. Developers are dividing big industrial sites into flex warehouses, or even converting them into retail if needed.”
Port-Centric Strategy Fuels Site Selection
Access to transportation infrastructure—ports, rail, and interstates—is driving tenant decisions as companies optimize for speed and cost-efficiency.
“It’s about proximity to the Charleston port, but also about building function,” said Johnson. “We’re helping users find locations that can support robotics, heavy power loads, and last-mile speed.”
Growing demand for faster delivery and supply chain visibility means that more infrastructure will be needed closer to population centers and ports.
West Coast Spotlight: Constrained but Competitive
Seattle and the Bay Area are displaying diverging dynamics. In Seattle, for example, vacancy signs are on the rise.
“There are a lot of sublease signs up,” said Kraig Heeter, SIOR, principal at Lee & Associates in Seattle. “It’s the first time I’ve seen that in 25 years.”
Institutional landlords are adjusting lease terms to keep large users in place, with some cutting asking rents by up to 40%—a sharp reversal from the pandemic boom.
“The Fortune 500 demand has cooled,” Heeter said. “Now tenants are in the driver’s seat.”
By contrast, demand in Bay Area submarkets like Fremont, Hayward, and Stockton remains strong, though constrained by high land costs, entitlement delays, and long development timelines.
According to Tran, projects can take 18 to 24 months from land acquisition to build-out, making early commitments and strong tenants essential.
Future-Proofing Industrial Assets
Across all markets, one theme is clear: today’s industrial projects must be built with the future in mind.
“Future-proof your industrial assets,” Tran advised. “That means solar readiness, EV charging, smart water systems, and flexibility built into the design. If you’re not thinking that way, you’ll fall behind.”
Despite current headwinds, the core demand drivers for the industrial market remain intact
“The market’s not crashing,” Heeter said. “It’s just correcting after an overheated period. If you’ve got the right space, there’s still demand. You just need to be more strategic than ever.”
