What Institutional Buyers Look for in 15,000 to 120,000 SF Industrial Properties

The industrial real estate market is experiencing a significant shift. Institutional buyers—once focused primarily on large-scale logistics hubs—are increasingly eyeing mid-sized properties ranging from 15,000 to 120,000 square feet. These assets offer strong upside potential in supply-constrained markets and serve a critical role in the evolving supply chain. But what exactly are these investors looking for when evaluating assets in this size range?

1. Strategic Location Near Major Transportation Arteries

Access remains king. Institutional investors want to see proximity to:

  • Highways and interstates for regional distribution

  • Ports and intermodals for import/export potential

  • Dense population centers for last-mile fulfillment

Submarkets that offer logistical efficiency and reduced shipping times are seen as more valuable—even if the property is smaller than traditional institutional targets.

2. Tenant Quality and Lease Structure

Even in a smaller footprint, tenant quality is non-negotiable. Key considerations include:

  • Creditworthiness of the tenant(s)

  • Length of remaining lease term

  • Escalation clauses and pass-through expenses

  • Triple-net (NNN) leases are preferred for their predictable income

Long-term leases with stable tenants—especially in logistics, manufacturing, or life sciences—make these properties more appealing.

3. Functional and Flexible Building Design

While Class A facilities grab headlines, functionality often trumps luxury. Institutional buyers look for:

  • Clear heights of at least 24–32 feet

  • Dock-high and drive-in doors

  • Heavy power supply (if manufacturing tenants are targeted)

  • Column spacing and layout that supports multitenant use or future reconfiguration

Older buildings can still attract capital—if they’re well-maintained and can adapt to tenant needs.

4. Market Fundamentals and Supply Constraints

Institutional capital prefers markets with:

  • High absorption rates

  • Low vacancy

  • Rising rental rates

  • Barriers to new development

Markets where land is scarce or entitlements are slow create built-in scarcity, helping ensure long-term value growth.

5. Opportunity for Value-Add or Core-Plus Strategy

Institutions are often looking for more than just a coupon clipper. They want upside. This might include:

  • Below-market rents that can be adjusted at renewal

  • CapEx-light improvements to increase NOI

  • Re-tenanting opportunities to raise credit profile and rent rolls

Assets that offer yield today and value growth tomorrow are especially attractive in an inflation-sensitive environment.

6. ESG and Building Efficiency

Environmental, Social, and Governance (ESG) considerations are becoming increasingly central to institutional investment strategies. A property with:

  • Energy-efficient systems

  • Solar panels or EV charging infrastructure

  • LEED certification or the ability to attain it

…can stand out and align with ESG mandates from pension funds or REITs.

 

Final Thoughts

CRE investing is a team sport. New investors sometimes try to self-manage, self-lease, or self-rehab a property to save money—often at the expense of performance.

Tip: Build your team early:

  • Commercial broker

     

  • Property manager

     

  • Real estate attorney

     

  • CPA with CRE experience

     

Final Thoughts

Institutional buyers are becoming more agile, shifting focus toward nimble, strategically located mid-sized industrial assets. For brokers, developers, and owners looking to attract institutional capital, the key is presenting properties that blend functional utility with long-term investment fundamentals.

Whether you’re looking to dispose of a stabilized asset or structure a sale-leaseback on a single-tenant facility, understanding these criteria can position your property for maximum interest and pricing.