Small-Bay Industrial Feels Diversified—Until You Underwrite the Turnover

A small-bay industrial property with multiple tenants often looks diversified at first glance.

More tenants are assumed to reduce risk.

But that diversification doesn’t eliminate risk—it spreads it across time.

Instead of one lease event, you’re managing continuous rollover, incremental downtime, and repeated leasing costs.

These spaces don’t lease all at once. They lease gradually. And that creates ongoing friction in the income stream.

The issue isn’t tenant concentration—it’s leasing friction.

If underwriting doesn’t account for that, the income appears more stable than it actually is.