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If you own small-bay industrial or flex product along I-20 West, in the Airport District, or anywhere in South Fulton’s industrial corridors, there’s a gap sitting in your rent roll that most owners haven’t looked at closely. Bulk industrial space along I-20 West is asking around $7.27 per square foot NNN. Small-bay flex product — the kind airport service contractors, last-mile operators, and trade contractors actually want — is clearing closer to $12 per square foot, and metro-wide small-bay flex is pushing toward $13. That’s a premium of roughly 62% over bulk industrial, and it’s the story most owners in this asset class are missing.
Why Small-Bay Flex Commands a Premium Over Bulk Industrial
The premium isn’t a market quirk — it’s structural. Small-bay flex vacancy across the metro sits at 3.7%–4.1%, compared to roughly 9% for industrial overall. Small-bay product drives about 87% of all leasing transactions in the category, yet it accounts for only around 35% of investment volume and roughly 2% of new construction. Nobody is building more of it, tenants keep needing it, and the result is a supply-demand imbalance that isn’t cyclical — it’s baked into how the category gets developed and traded.
The Mark-to-Market Gap, in Real Numbers
JLL’s research on the I-20 West small-bay portfolio puts mark-to-market upside at roughly 29% — meaning in-place rents across that corridor are running nearly a third below where the market would clear today. On larger leases (10,000+ square feet), new deals are pricing 5.8% higher year over year, while renewals lag at 3.3%. That gap between new-deal pricing and renewal pricing is exactly where legacy owners are leaving money on the table: if your in-place tenant signed three or four years ago, there’s a real chance their rent sits 20–30% below what a new tenant would pay for that same space today.
Who’s Actually Renting Small-Bay Flex in the Airport District
The tenant profile matters as much as the rent number. Airport service contractors, ground handlers, last-mile and e-commerce operators, light manufacturers, third-party logistics companies, and trade contractors — HVAC, electrical, plumbing — make up the bulk of small-bay flex demand near Hartsfield-Jackson. These tenants typically want 3–5 year terms, not institutional 10-year leases, and they care more about grade-level or dock-high loading, 18–28 feet of clear height, and highway or airport-badge proximity than about a marble lobby. Lead with total occupancy cost, not rent per square foot — that’s the number these tenants actually underwrite against.
What This Means If You Own Along I-20 West, Forest Park, or College Park
Building specs matter more in this category than most owners realize. Forest Park and College Park still carry a fair amount of modified-gross stock, where the owner covers roof and structure — newer product tends to run NNN, so knowing which lease structure you’re in changes how you should be pricing renewals. Pre-1990 buildings often top out at 14–18 feet of clear height, while modern racking tenants increasingly want 22–28 feet. A well-located, functional small-bay building wins in this market; a generic, poorly specced one lags behind even in a tight-vacancy environment. And a right-sized 15,000-square-foot flex suite consistently outperforms an oversized bulk box that doesn’t match what tenants in this category are actually looking for.
If you signed a tenant in 2020, 2021, or 2022, they’re now inside a 12–24 month window of their renewal — which means this is the moment to start that conversation, not after they’ve already priced the market themselves.
Modified Gross vs. NNN: Know Which Lease You’re In
One detail that trips up even experienced owners in this category is lease structure. A lot of the older small-bay stock in Forest Park and College Park is still on modified-gross terms, where the owner covers roof and structure — which changes your real net yield compared to a NNN lease, even at the same headline rent. Newer product coming online tends to default to NNN. Before you compare your rent roll to a market average, confirm which structure you’re actually in, because a $10/SF modified-gross rent and a $10/SF NNN rent are not the same deal for an owner.
FAQ: Small-Bay Industrial Flex in South Fulton
What is small-bay industrial flex real estate?
Small-bay industrial flex refers to smaller, often subdivided industrial buildings — typically under 25,000 square feet per bay — that combine warehouse, light manufacturing, and light office space, popular with service contractors, 3PLs, and trade businesses.
Why is small-bay flex outperforming bulk industrial in South Fulton?
Small-bay flex vacancy runs 3.7%–4.1%, well below the roughly 9% metro industrial average, while new construction of small-bay product is minimal — creating a structural rent premium of roughly 62% over bulk industrial space.
How do I know if my industrial flex rents are below market?
If your tenants signed in 2020–2022 and you haven’t done a mark-to-market comparison since, there’s a strong chance your in-place rents sit 20–30% below current market — worth a professional rent-roll review before your next renewal conversation.
This is Part 1 of a three-part South Fulton Industrial Flex Series. Part 2 (October) covers what owner-users should know before buying. Part 3 (November) covers positioning before selling. Email camille@camillereidcre.com for a corridor-specific read on your property.
