I buy both. But if you’re asking me which asset type is hotter in the Carolinas right now, it’s flex. And it’s not even close.
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Identify your building type: Are you operating multi-tenant flex or larger single-tenant industrial? The valuation approach and buyer pool are completely different. -
Understand your tenant stability: Document occupancy rates and lease renewal history. Flex buildings with 95%+ occupancy have enormous value premium over industrial with 80-85% occupancy. -
Research buyer demand in your market: Multi-tenant flex is hot everywhere in the Carolinas. Traditional industrial is more selective by location. Know who’s buying what in your area. -
Compare cap rates in your market: Get comp sales data showing cap rates for flex versus traditional industrial. This shows buyers’ actual risk assessment.
What’s driving flex demand
The tenant pool is massive and it keeps growing. Every HVAC company, electrician, plumber, and contractor in the Carolinas needs a small bay. These businesses are booming because of population growth and construction activity. And there’s been almost no new small-bay construction for a decade because developers can’t make the numbers work at current construction costs.
What makes flex more attractive to buyers
- Massive tenant pool (every contractor in the area)
- Consistent 95%+ occupancy even in economic downturns
- Steady 5-8% annual rent growth with inflation
- Quick lease-up when units turn over
- Lower per-unit risk spread across multiple tenants
What challenges traditional industrial
- Limited tenant pool for 15,000+ SF single spaces
- 6-12 month lease-up periods are common
- Tenants negotiate harder with fewer alternatives
- Vacancy carrying costs are substantial
- Buyer pool is narrower (limits competition)
Result: existing flex buildings are running at near-full occupancy with 5-8% annual rent growth. That’s a killer combination for building value.
Traditional industrial is more mixed
Bigger industrial buildings (15,000+ SF single spaces) have a thinner tenant pool. Finding a tenant for a 30,000 SF industrial building might take 6-12 months. During that time, you’re carrying all the expenses with no income. When you do find a tenant, they’ll negotiate harder because they have fewer competitors for the space.
That said, well-located industrial with modern specs (20+ foot clear, dock loading, three-phase power) is still in demand. The logistics and distribution market in the Carolinas is real. But the bid for these buildings is more selective than for flex.
The cap rate spread
Multi-tenant flex parks in Charlotte are trading at 7-7.5% cap rates for well-leased product. Traditional single-tenant industrial in similar locations might be at 7-8%. That half-point difference might not sound like much but on $200K of NOI, it’s $350K-500K in value difference.
The spread gets wider in secondary markets. Flex stays tight because demand is everywhere. Traditional industrial cap rates widen because the buyer pool for larger spaces in smaller markets is limited.
Which should you sell?
If you own both and you’re thinking about selling one, the flex building will probably be an easier, faster, and higher-value transaction. If you own a traditional industrial building in Greenville or elsewhere, don’t worry. There are still buyers. It just might take a more tailored approach to get the right price.
Seller takeaway
Whether you own flex or traditional industrial, Jim Kittridge buys both. Understanding the market dynamics helps you price accurately. Call 704-600-3839 to discuss your building type and current market conditions in your area.
Either way, call me. I buy both. 704-600-3839.
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