A Flight to Industrial Condos

Five years ago, no one would have guessed we would be sitting here watching flex and industrial condos trade north of $300 per square foot. Yet here we are in 2026, on the verge of multiple condo projects being delivered at record pricing.

How did we get here?

Why does it work?

Simple. The math is mathing.

In today’s economic environment, rising construction costs, higher interest rates, and widening gaps between buyer and seller land expectations have made traditional big box industrial development extremely difficult. In 2025, we recorded the lowest amount of industrial square footage delivered in the past decade.

For years, the market was delivering over 10 million square feet annually, and it still was not enough. The slogan was simple: build it and they will come. Developers listened, and they delivered. 2020, 2021, and 2022 were the glory years of industrial real estate. Annual rent growth reached 40 to 45 percent year over year. Salt Lake City became a powerhouse for big-box development. Then March 2022 happened.

The Federal Reserve raised rates. Developers put their pencils down. Everyone took a vacation. When everyone came back, the problem had not gone away. The big questions became clear.

How do we build?

What makes sense?

What is the market actually asking for?

That is when the flight to industrial condos began.

For a long time, developers tried to solve the equation. What lease rates are required? What does land need to cost? How creative can we get? Landowners, however, were still pricing based on pandemic-era highs.

Back in 2018, industrial land traded between $7 and $10 per square foot. By 2021 and 2022, land was trading at $20 to $23 per square foot. That pricing simply did not pencil.

Many developers pivoted to buying second-generation assets. Tenants were chasing affordability, and older buildings made sense. But the second-generation product is not exciting. It is not new. It is not shiny.

So the industry asked a better question.

What product is still performing?

What are tenants still willing to pay for?

Enter small bay industrial.

Bluffdale Exchange

Small bay industrial was the asset class that survived the fire. Lease rates north of $1.00 per square foot were still achievable. Developers realized that meaningful volumes of this product had not been delivered in years, and the opportunity was clear.

Smaller spaces, while expensive on a per-foot basis, were still affordable in total dollars. Small businesses are the backbone of America. They did not disappear. They still needed space. They were reliable.

Developers rushed in. Projects moved closer to residential neighborhoods. Owners wanted shorter commutes. Convenience became king. Suddenly, land prices mattered less. Interest rates mattered less. Construction costs mattered less, because the math was mathing.

Over the last five years alone, nearly 600,000 square feet of small bay industrial product has been delivered into our market. That level of supply is unprecedented for this segment. New projects seemed to launch almost monthly.

But nothing lasts forever.

Carter Webster

Those who got in early thrived. Those who entered late faced tighter margins and tougher leasing conditions. And in commercial real estate, when something stops working, you sell. This time, it was not distress. It was an opportunity.

For the first time, small business owners were presented with a real chance to own industrial real estate. Historically, the mom and pop operator growing out of their garage had only one option: lease. Ownership felt out of reach.

When developers pivoted from leasing small bay products to selling them, the floodgates opened. Today, we are seeing more industrial condo inventory online than ever before, and the best product still cannot be built fast enough.

In just the past three months, the Peterson/Bourdeaux Team has listed three industrial condo projects for sale. One project delivering in February 2026 already has 12 of its 15 units accounted for, with only three remaining, priced at $350 per square foot.

Two additional projects have not even started vertical construction yet, and demand is already showing up. In Heber, three of the seven units are already spoken for at $400 per square foot. In Bluffdale, a 46-unit project launched with eight reservations in the first ten days, also at $400 per square foot.

So the real question becomes, why?

Why are buyers willing to pay $350 to $400 per square foot?

How did we move from $200 to over $300 per square foot so quickly?

Because small business owners are realizing something powerful, owning real estate through their business creates long-term financial freedom. With financing tools like SBA loans, ownership is now achievable with minimal money down. For the first time, small operators can build equity, control their future, and create generational wealth, just like institutional players have done for decades.

And that is why the flight to industrial condos is not a trend.

It is a shift.

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Tre Bourdeaux is the vice president of Legend Commercial's Peterson/Bourdeaux team. The Peterson/Bourdeaux Team is a seven-person industrial real estate team leading the wave of industrial real estate across the Wasatch Front. With over 40 years of combined industrial real estate experience, the team represents landlords, tenants, buyers, sellers, and developers with full-service real estate solutions.

From Tremonton to Payson, the Peterson/Bourdeaux Team specializes exclusively in industrial real estate, providing guidance across land, leasing, investment sales, and industrial condo development.