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Shallow Bay Industrial: The Underrated Engine of Austin’s Industrial Market
In the rapidly evolving Austin, TX, industrial real estate landscape, shallow bay industrial spaces—with smaller footprints typically ranging from 25,000 to 150,000 square feet—are increasingly recognized for their strategic value and versatility. Distinguished by quicker access, adaptability, and suitability for urban infill and last-mile logistics, these properties offer compelling advantages amidst a large-scale industrial parks and warehouses market.
Unlike their larger counterparts, shallow bay properties accommodate multiple tenants across shorter lease terms, generally one to five years. This leasing structure allows landlords to adjust to market dynamics frequently, capitalize on rental growth opportunities, and mitigate economic risks through tenant diversification. Moreover, these spaces, often built between the 1970s and 2000s, are generally situated in prime infill locations within dense population centers. This location advantage is difficult to replicate with new development, creating a high barrier to entry and often commanding higher rents per square foot.
The Collective at South Congress is a prime example of successful shallow bay development in Austin. Strategically located near downtown Austin, IH-35, and significant retail hubs, The Collective comprises flexible units ranging from 1,344 to over 9,000 square feet. With clear heights between 16 and 24 feet, versatile layouts, and grade-level loading, the property has attracted a diverse tenant base, including fitness studios, automotive services, retail outlets, and small-scale manufacturers. Projects like Balcones Real Estate Group’s 500 Wonder World in San Marcos and Freehill Development’s Comsouth project in Cedar Park underscore ongoing investor interest and robust tenant demand.
Target tenants for shallow bay spaces span many sectors—from local manufacturers and construction trades requiring workshop and storage areas to e-commerce fulfillment centers prioritizing last-mile delivery efficiency. Additionally, service providers such as HVAC companies, creative studios, and fitness concepts (including pickleball facilities) increasingly value these adaptable, centrally located spaces, even at premium rents.
Looking forward, Austin’s outlook for shallow bay industrial assets remains strong. Although recent market trends have favored large-format industrial developments, a notable gap has emerged in the supply of smaller to mid-size flexible spaces. This undersupply, exacerbated by high land costs and zoning restrictions, supports sustained demand for shallow bay properties. These assets address a critical market need with unique appeal, leasing flexibility, and strategic positioning. They are poised to support the continued growth and diversification of Austin’s vibrant economic landscape.
*Research information is sourced from CoStar data compiled through ECR from custom reports using existing, non-owner occupied properties above 10,000 SF.
