Industrial Market Development Trends & Tenant Demand

Why It Matters

The shift toward mid-size, near-shored industrial space redefines where capital will flow, offering developers a high-return niche while signaling that oversized distribution projects and speculative data-centers may face headwinds.

Key Takeaways

• Reshoring drives demand for mid-size industrial facilities in Midwest.
• Vacancy concentrates in >500k-sf distribution centers; smaller spaces stay tight.
• Aspen Funds targets 200-300k-sf spec builds near I-35/I-70 corridor.
• Tax abatements and shovel-ready land accelerate development timelines.
• Data center projects deemed frothy; focus remains on manufacturing/warehousing.

Summary

The episode of the Industrial Real Estate Show features Aspen Funds CIO Ben Fraser discussing how the industrial sector is being reshaped by supply-chain shocks, reshoring trends and a shifting geographic focus toward the U.S. interior corridor.

Fraser explains that COVID-19 and the subsequent chip shortage exposed fragilities in global supply chains, prompting large manufacturers to bring production and inventory closer to end-users. Labor costs in China have risen dramatically, making near-shoring to the Midwest or Mexico financially attractive. At the same time, vacancy is now concentrated in mega-distribution centers over 500,000 sq ft, while assets under 200,000 sq ft remain scarce, driving a pivot toward mid-size, flexible spaces.

He cites Ford’s $3 billion truck inventory stranded without microchips as a vivid example, and notes that Kansas City was ranked by CBRE as the nation’s top leasing-growth market. Aspen Funds has acquired roughly 500 acres of shovel-ready land, typically developing 100-150 acres into 900,000-1.3 million sq ft of 36‑ft‑clear‑height spec buildings that can be finished for distribution, warehousing or manufacturing. The firm remains skeptical about data-center projects, calling the current AI-driven hype “frothy.”

For investors and developers, the takeaway is clear: prioritize 200-300k sq ft spec builds in the I-35/I-70 corridor, leverage local tax abatements, and avoid over-committing to oversized distribution hubs or speculative data-center assets. The window for cost-effective development appears open, but success will hinge on matching building size and flexibility to the emerging demand for near-shored manufacturing and agile warehousing.

Original Description

In this episode of The Industrial Real Estate Podcast, Chad Griffiths hosts Ben Fraser, Chief Investment Officer at Aspen Funds, to break down the current industrial market development trends and what’s really driving tenant demand across the U.S. as we move into the next phase of the cycle.

Ben shares how reshoring and nearshoring are reshaping industrial location decisions, why demand has shifted away from mega-box distribution facilities toward mid-sized industrial buildings, and how developers are adapting their strategies to changing tenant requirements. The conversation also explores site selection, infrastructure, incentives, and why markets along the I-35 corridor—including Kansas City—are seeing outsized activity.

Key topics include:

- Where industrial tenant demand is strongest today

- Why not all industrial assets are performing equally

- Manufacturing vs. warehousing demand in today’s market

- How investors should think about industrial development risk vs. reward

Whether you’re an investor, developer, broker, or simply tracking the industrial real estate market, this episode provides a grounded look at what’s working, what’s not, and where the next opportunities are emerging.

Learn more about Aspen Funds: AspenFunds.us

Ben' Podcast: investlikeabillionaire.org

Ben's book: https://a.co/026KOkEM

Industrial Real Estate MERCH: https://industrializemerch.myshopify.com/

More From The Industrial Real Estate Podcast: https://linktr.ee/industrialpodcast