The national conversation around industrial real estate has shifted. Industrial real estate investment strategies are increasingly focused on small-bay industrial assets occupied by essential service-based businesses. After years of chasing e-commerce giants and big-box distribution, capital markets are increasingly focused on a different kind of tenant. One that’s been quietly filling small-bay industrial space in markets like Spokane for decades.
BKM Capital Partners’ Q1 2026 Light Industrial Market Update puts a name to the category: HALO businesses – Heavy Asset, Low Obsolescence operators. Electrical contractors, HVAC service companies, Fire and life safety firms, Specialty manufacturers, Waste and route-based services. These aren’t flashy tenants. They don’t make headlines. But they show up every month, they need functional industrial space to operate, and they’re not going anywhere because their business is the infrastructure.
Why this Matters Now
The data behind the national trend is meaningful:
- 80% of all industrial leasing activity in Q4 2025 consisted of leases under 50,000 SF, confirming that demand is concentrated exactly where Spokane’s inventory lives.
- Buildings under 100,000 SF are averaging 4.9% vacancy – 50% lower than larger-format product.
- Properties under 150,000 SF command a 21% rent premium over larger buildings.
These aren’t anomalies. Limited new construction in the small-bay segment continues to reinforce supply constraints, creating a favorable backdrop for rent growth and long-term occupancy stability.
The Inland Northwest Angle
Spokane Valley and North Idaho aren’t Phoenix or Dallas. We don’t have the same development pressure or institutional capital chasing every deal. What we do have is a deep, established base of exactly the businesses BKM is describing: electrical and mechanical contractors, specialty fabricators, telecom infrastructure firms, fleet-based service operators, and building trades companies that need 3,000-15,000 SF of functional industrial space near their customer base.
These tenants don’t require Class A amenities. They require clear height, grade-level or dock access, adequate power, and proximity to the corridors they serve. And because their operations are place-dependent: their service area, their crews, their equipment, they tend to renew.
What this Means if you Own Industrial Space Here
The national capital markets story is validating what experienced Inland Northwest landlords already know: the boring tenant is often the best tenant. Investors are increasingly viewing HALO businesses as infrastructure operators with durable asset bases and long-term relevance, which translates directly into occupancy stability and lease credit quality.
These are businesses built on trucks, tools, licenses, and long-term service contracts. The space they occupy isn’t overhead, it’s operational infrastructure.
The national market is catching up to what the Inland Northwest industrial base has always been.
Many of these businesses prioritize functional space over amenities, making building design decisions such as warehouse clear height increasingly important.
For additional insight into local industrial market fundamentals, including vacancy trends, rental rates, and development activity, download our 2026 Spokane County Market Report.
Omar Sadaoui, CCIM, is a licensed commercial real estate broker in Washington and Idaho specializing in industrial properties across Eastern Washington and North Idaho. He works with owners and occupiers to evaluate and position assets for long-term success. To get in touch with Omar, email omar.sadaoui@svn.com or call 509.601.0695