Small-Bay Warehouses, E-Commerce, and Industrial Trends in 2026

0:03 This week on Commercial Real Estate Secrets, we have Chad Griffiths. He is the Market Authority of Industrial Real Estate in Canada and the host of the Industrial Real Estate podcast. Chad, thank you for being on the show today. I am absolutely honored to be here. Thanks so much for having me. Love industrial real estate and anything we can chat about it. I love it. You know, I you look at some of these other sectors, hospitality, retail, they're beautiful. It can be flashy. And then you look at a warehouse and it like, to an untrained eye, it could seem kind of like sloppy and boring. And, but it's funny because the last 20 years of industrial real estate, the script has flipped where industrial went from being the ugly duckling to being the belle of the ball.

0:54 How did you see that and and what did the timeline look like in Canada for that shift that we're all seeing and experiencing? Yeah. And Canada moves pretty much lockstep with the US So part of the my obsession with industrial real estate is I actually follow the US quite actively as well. And I've got a pretty good handle on the major markets in the US and it's very similar. What happens in the US is going to happen in Canada. We're very closely related. We might be a little bit behind on some trends, but it's very close. So I, I would say that the 20 years that have been in industrial real estate have followed ecommerce and the growth that's been in there. And it's funny when 20 years ago, when I started, I didn't understand what industrial real estate was, but I still had some real estate background.

1:40 Nobody that I knew had any idea what I was doing. Like there's, I'd talked to somebody, my family or friend and they're like, I don't know what Chad does. It's like goes into mechanic shops or something like, no, have any idea. And you're right. Fast forward to today and it's so prevalent. Everybody knows what industrial real estate is. The doctor next door wants to invest in industrial real estate. It's it's on the news now anytime there's a supply chain issue. Remember the Suez Canal when the ever given ship got stuck? Everybody was talking about supply chains. So now it's it's become front and center in people's minds. But it's also much more prominent where you'll see a big distribution center on a major Rd. I we won't have bet anyone listening right now, if they're, if they look near their airport, there's probably an Amazon distribution center right outside the airport or very close to it on a major Rd. Whereas 20 years ago, industrial was intentionally pushed back from the public purview, but they designed it to be removed from major roads.

2:40 So it's gone front and center. It's much more common to see it now. And I think that that is the, the e-commerce trend. And 20 years ago, if that takes us back to 20,005, which is kind of crazy to even think about, but it that that was that was really the start e-commerce, I guess you could say it started in the.com phase in the late 90s, but it really didn't start getting momentum until the early 2000s. And we watched that over the last 20 years, we watched accelerate from being very, very small to now of a set of Amazon's one of the top country companies in the world. All the major companies have major online presence and that all leads to massive warehousing and distribution need. So it it is kind of crazy to think that over the last 20 years I've sat in the in the front seat watching this all evolve from being that unknown, purposely hidden, not a fully appreciated industry to now everybody knows what it is and it is much more common and much more talked about. So very, very crazy to see that happen in the course of 20 years.

3:47 I mean, it's humbling to realize that like we're not actually in control of consumerism and to see that such a massive shift. I mean, I can't even bring the pandemic into it and what that did to office. But we'll, you know, we'll, we'll stick in the industrial sector, how consumer behavior changed because of e-commerce and the ripple effect that had on the product type that we work in these warehouses. It's like it's humbling and it's unbelievable and it's nothing. I don't think, you know, my family's had warehouses since the 80s. They couldn't have ever even anticipated or seen around that corner.

4:28 Whoa. And I don't think, I don't know, I, I, I don't think there's any end insight in my opinion, but. I, I think as myself, as a consumer and try to extrapolate that and how other people would think is that I, I order way more things online than I actually do go into stores. Because just the whole thought of having to get in the car and drive, drive through traffic, going to a park, shopping lot, parking lot, which I hate more than anything. And then having to go into the store and find what you want, wait in line and then do the whole thing in reverse. Or as I could just go online and find what I want and it gets delivered to my front door for the same price or less. There's just, there's, I don't see the, the value proposition in buying things online unless it's for the experience that I wanted to find something that I want to try on a suit Jack, a blazer for the real estate gala or something like that.

5:20 Unless it's something very where the experience matters, I just don't see why I would go into a, a store to, to get something that I can have delivered to my front door. So I think if, if that trend continues and more and more people start getting things in the system evolves and the, the value chain of the supply chain continues to evolve to make this more and more efficient, then you're right. I, I just, I don't see an end to this either. There'll be some upper limit, of course, because you only need so many warehouses to service everybody. But, but I think, I think we're a long way from that. I think there's still a lot of growth ahead for the next 5 to 10 years. I I agree, but Speaking of growth and well, OK, all right. I was like going for this cool Segway and it wasn't good. But in early 2025 in America, we have new tariffs that were deployed onto international, you know, onto our product. And this had a huge ripple effect on industrial leasing in 2025, where every RFP over 20,000 square feet, every LOI that was out in January 2025 got ripped out and thrown away and leasing stalled and it was sad and ugly. What have you seen in Canada in industrial real estate in 2025? Were tariffs an issue?

6:49 What? What's going on in your neck of the woods? Yeah, I, I'd be remiss to say that it's, it hasn't had an impact because it certainly has. But I, I would equate it to if you're 2 separate companies into two areas. And, and this is very simplistic, of course, but if one company has heavy reliance on exports, particularly to the US versus one company that doesn't, maybe they're just making things locally or maybe they're shipping it all over the world and maybe the US is just a small segment of it. But if you look at that, there's, there's going to be two different types of companies. 1 is going to be heavily dependent on the US and one is less dependent. The ones that have been heavily dependent on the US are are really feeling the pressure and understandably so. It's just there's unpredictability where they're not sure how how the tariffs are going to be affected and not sure how long they're going to be in place. They're not sure if they're going to get repealed or reduced or increased.

7:42 It's just that uncertainty. You and I know very well, anytime there's uncertainty, it causes people to just sit on their hands and and just wait to see what happens. And I get that I'm not a company owner, but if I was and then I was faced with these uncertain tariffs and how that could impact my business, I would probably just try to wait. And maybe you wait out a political cycle. Maybe you just wait out the business decision, maybe things improve because you're going to be able to export to other countries. There's all sorts of things that you can do, but companies don't need to make quick decisions unless they're forced to. So lease is coming up or or they're just running out of space, Whatever it is, a lot of companies can just say to their landmark, listen, we just need a a year of time. We're not sure what we're going to do. We might stay, we might leave.

8:28 If you have to pay a little bit of a overhaul premium, then you do just to buy yourself time. That section unquestionably has concerns with the tariffs and, and you see it and, and they're very slow, but it's there's other companies that are very resilient and they're saying, well, we're not that dependent on the on the US or any other country for that matter. And it's just we're going to continue doing business or retool will be sensitive to the fact that these tariffs could be farther reaching, could have more implications. But let's make the best decision we can with the information we have right now. And that segment has actually been doing quite well I'd say generally in across Canada. And if you look at a market like Toronto, which is the 4th largest industrial market in North America, which most people may not fully realize by just being in Canada, 4th largest industrial market. There's around a billion square feet of industrial. They can see rate right now is in the 5 to 6% range, which is has had some upward pressure.

9:26 But five years ago, four years ago it was essentially 0%. So that that has been a drastic move. Anytime you move from 0% vacancy to 5% vacancy, that shows in a lot of vacant properties. But 5% is still a very low rate when you compare it to other major markets in North America. So there's pressure, there's undeniably pressure and there's concern. But I think industrial has been so slow to add massive amounts of inventory like other asset classes have that even if we do see a hundred 200 basis point increase in vacancy rates, I think a lot of landlords will still be quite, quite fine. And I think a lot of tenants are still going to be fine. But you're right, I think 2025, if anything, has been a year of inactivity, sales side, leasing side, it's and for and I understand why.

10:16 It's just if, if people don't know the rules of the game, what do you do? And I think a lot of them are just saying, well, let's just wait. It's so funny I have been saying this all week. It is the second week of November 2025. You know, as a broker in the trenches, everyday we're talking to other brokers, we're trying to kick around deals, get something done, and nobody is sticking. Like it's not sticky. Tenants aren't signing somewhere, but not like there's an overwhelming trend that I'm seeing that like brokers are resurfacing with the same requirement and they they have options because they can see is at all time high. I'll be it right It we're not like 50% vacant like office, but we've gone up a few points in terms of vacancy. Nobody's sticking.

11:06 It's very interesting. And you know, do I think this is forever? No, but it's a fascinating trend of today. And I'm curious, what do you think we'll see in 2026? I personally I'm surprised that the tariff situation has gone on as long as it has because this isn't a new topic by any means. I thought it would have been resolved quicker or at least had some firm guidelines in place because I think that's what people are looking for is if there's tariffs. OK, well then no, the that's the new rules of the game. But when you don't understand what's changing, imagine playing a game of football and all of a sudden halfway through the game they're like, OK, it's now 4 downs or it it's 20 yards to get a first down and you're like, well, that changes everything. Like now we got to revamp everything. I think that's what a lot of businesses are going through is they're just saying, well, we don't know how long it is to get a first down.

11:57 So I'm honestly surprised that it's lasted this long. I would hope that as we go into 2026, there'll be some pressure or some consumer appetite to resolve this. I know there's Supreme Court issues at play with this. And in terms of the validity of tariffs, I think that there's an appetite for countries to negotiate and get this settled. There's got to be some public and corporate push to do this as well. So I would hope that it gets resolved in 2026. But if anything has taught, if we've learned anything over the last five or six years, it's that everything is in chaos. Like going back to March of 2020, we've been living through chaos for five or six years. So if anything, I think we should expect more chaos.

12:39 I don't think, I don't think that there's any reason to believe that all of a sudden 2026 is going to be normal when we've just lived through five of the most chaotic years and in a century. So I guess there's two parts to me. I'd love to see some resolve on that front, but I'm expecting more chaos. That's what I'm expecting. It's so funny, like when 2020 hit, it was like my old man was still in work in and it was like everybody hit the deck. Like yes, you see it like, you know, freaking out that it was going to be this disaster and it was never it really wasn't this like disaster, but it never like peaked in terms of, you know, like in 2008, it was very obvious when the bubble popped in the fallout and the mania like 2020, I was like hiding under my desk waiting for it.

13:35 And then like everybody was like wait till 23 and then 23 was still like, it's weird, but like it's fine. And then they were like survive till 25 and now it's like it's it's just it's like you said, it's havoc, absolute havoc. So, but I, I, yeah. Go ahead. My, my, my social media philosophy facetiously is engagement bait till 28. I think by 28 maybe, maybe we're looking good. I can see that being a good clip for social. And yeah, I mean, it's funny, I I can't even wrap my mind around 28. I'm trying to trying to gear up for 26.

14:16 But no, I you're not wrong. OK, I have a few like speed round questions. Just as we're like, you know, I'm in the presence of another industrial real estate mega nerd. This doesn't always happen. Few speed rounds for fun. Love it. Craziest tenant you've ever seen? I've got a really funny one actually, that's not necessarily crazy because it's kind of normal, but it's a crazy story. So it was a company leasing a space and they were a water bottling company. So they had customers go and and refill their water. And I'm guessing it was, it was just purified water is what they were advertising, whatever you'd get from there. But what they were doing is they weren't doing anything. They were just filling it up with water from the hose. But the best part is that the water was on a house meter so that it was a multi tenant industrial building. So this is water company that's supposed to be filtering the water and upgrading this for to not be tap water and it all that they were using was tap water on house meter. So they were getting free goods that they're costing goods was essentially 0 because all the other tenants were contributing to their massive water bill.

15:28 And then they still failed. They still, they still defaulted on their rent even though they had no, they had free water that they weren't upgrading at all. It's just free tap water they're selling as purified water. So that's my favorite one. You're like your product is literally a part of the Cam charges. Like, get your shit together, yeah. Like those guys should have been making making nothing but money, but they still managed to screw it up. Wow. Well, never a dull moment with tenant uses. It's outrageous. I would say my craziest one, I rented 7500 square feet to a woman who sold individual Legos online. So she would buy, I'm not joking, pallets of garbage and she would sort through the pallets of garbage. And then there was like a large office component in this unit. And when you went into the office lined with like thousands of mini drawers, drawers this big, just 10s of thousands of mini drawers, and she would sell individual Lego pieces. She'd skip the Legos out of the trash, sort them and sell them individually online.

16:38 So did she do? Well did the 7500 square feet, that's a decent size operation she did. She did, but then, you know, she personal stuff is how that story ended it, but I digress. I suppose another one would be the security company that was a front for a gambling ring and a sex club that didn't move well either. Yeah. Yeah, that can only. Last so long before someone connects the dots, yeah? Oopsies. At least that was on our building, so like the fuck up was ours. But anyway, OK, that was fun. Next one if you could only invest in one industrial real estate REIT for the rest of your life, which would it be? Prologis easy choice for me.

17:28 I'm I follow pro and I am invested in Prologis. They're the bellwether of the industry, 1.2 billion square feet in their portfolio, all the major markets. They understand industrial real estate better than anybody. They're they are the goats of industrial real estate in my mind. So easy choice. Prologis they have a. Amazing footprint here in Denver. And I did a deal with them and their lease was 9 pages. And I was like, yeah, it was like I did like a, you know, 90 page lease with another REIT and then Prologic. I was like, where's the other part of the lease? They were like, this is our lease. I was like, Oh my God.

18:12 So that's cool. They're ahead of everything in the trends. Like it's they are trendsetters for that's why I follow them so much is if anything that Prologis does is going to come to the rest of the industry because they're just so big and influential that they're the bellwether. If they're, if anyone in the industry should be following Prologis to get advanced notification of what's coming to the rest of the market. Wow. That's cool. That's interesting. OK, last speed round question. Tell me the specs. If you were to design your absolute perfect warehouse on the ownership side, I would.

18:54 Do a multi tenant small Bay industrial building on three acres so try to keep relatively low side coverage. So an acres 43,560 square feet so call it 150 for ease. I'd probably try to keep 1/3 of site coverage just to have landscaping and maneuvering, a little bit of outdoor storage. so-called a 50,000 square foot building with two to 4000 square foot bays with the ability to combine them if necessary so that if a tenant needed ten 15,000 square feet I could do it without having to make major internal modifications. But also the ability to take those down to 2 to 2 to 4000 square feet. That's exactly what I'd build.

19:37 Grade loading, decent enough marshalling area at the back, 24 foot ceilings at the Max, maybe not even that high, and very simple. Not not extravagant, just a decent curb appeal so that people would be proud to show up to it. Nothing crazy to keep. Keep rents competitive and you have 50,000 square foot multi tenant building on three acres. That's what I'd. That's what I'd build. Sounds like a beautiful building to me. Would. You build what's yours You are your owners too, so let's how does that compare? What? What would you build now, knowing what you already have? I. Mean it would not be far off of exactly what you're describing. I think we're coming into a let me just tell you my experience high level five years ago I used to get calls every single day. We want to buy small day multi tenant off market industrial real estate all day.

20:31 This this was the phone call. OK, you know, well, OK, what I am whatever. Five years down the road I'm getting the same calls, but it is for iOS, the phone calls are I want heavy industrial, off market, low coverage sites, heavy zoning and I am obsessed with trends, right. So seeing that trend, understanding logistically as a society how we consume, it's like, I wouldn't say the building you described was far off of what I would pursue. I think oversized drive in doors are like one of the most premium feature of a unit, specifically multiple yard, right?

21:15 And it doesn't make any sense to have a industrial property with no parking because the whole point of an industrial property is logistics. So I would say pretty damn close to the building you described. You know, the very first building my dad ever syndicated in 1999, we still only submantage it to this day is 30,000 square feet, 18 tenants, 9 on each side. I would say it's a there. It is heavy in terms of management when you have 18-16 hundred square foot tenants or you know some tenants take up two units. So you know, it is a lot, I would prefer to hang out in 4000 square foot to like 8000 square foot size range. But from a risk factor, from a tenant demand factor, those 1600 square foot units sure stay full, right, Sure pays the bills and it's incredibly risk adverse. So we have the same building, it's just a little different. Yeah, I, I, I'm with you on that, though. In 20 years I've been doing this, those small bays are always full.

22:34 No matter what UPS, downs, Great Recession, anything, they're always full. There's always tenants for it. So until it gets to the point where there's too much of it, more where there's too many guys like me with that are saying, oh, we should build this and let's, let's go and do it. And then all of a sudden 20 of them go up. Until that happens, I think that there is way more demand than supply. So I I'm very rosy on my outlook for Small Bay industrial. Hell yeah. This is a crazy story. One time we had a tenant like who was a cichlidarium. A cichlidarium means they bread fish cichlids and we had to evict them.

23:14 So we had to evict these tanks of fish. It's a ridiculous story, but anyway, I have. Never even heard that term before the fish. Eviction. So the great. Fish eviction of 2023. That could be a story on itself, I know. If only I walked around with a camera and. But. Anyway, Chad, before I let you go, and I don't want to let you go, but such is life, what is your commercial real estate secret? A good final question, I would say people want to talk to you. That's generally speaking, if somebody's in the industry, whether it's a tenant, whether it's a landlord, an investor, appraiser, banker, whoever it is, people want to talk to you because they should.

24:03 If they're not, they're missing out an opportunity to learn something about the industry. The key, though, is that you have to have something to talk to them about. It can't just be calling and saying, hey, I'm Chad, I work in the industry. I want to represent you on your next deal. That's in it. That's a nuisance. But if I call them and say, hey, a building across the street from you just sold, wasn't sure if you're aware of it, but I'd love to give you some details on it. They're going to take your call. So talk to more people with the mindset that you have something to talk to them about and just do it at scale. That is the secret to this business and in my humble opinion, yeah. I couldn't agree more. I love schmoozing for a living. So we do, we wear out shoes and, and and our voices are sore at the end of the day and and our spouses are like, you didn't have a hard day.

24:49 You were at the office drinking coffee all day. I sure feel tired though, mentally. It was strenuous, Chad, for the listeners and I forgot to mention your book or can they listen to the podcast? I know, but you have a book about I want I want you to tell everybody about the book and then where they can find you, follow you, listen to the podcast content, do etcetera. Yeah, thanks. Industrial Real Estate Podcast is a very tough name. We brainstormed that for a long time on coming up with a name for an industrial real estate podcast by calling it the Industrial Real Estate Podcast. But it's memorable. It's memorable five years we've been doing it. Now I've got a producer that's that I brought on three years ago.

25:32 That helps me with a lot of it now too. So that's why I say we. But yeah, it's on Spotify, Apple, We just moved it over on YouTube to a new channel. So it's just called the industrial real estate podcast, making it easier to find. And then last this year actually, I guess I wrote a book industrialized, the Insider's Guide to Industrial Real estate. And just reflecting on me being a big industrial real estate nerd, I just wanted to put out a resource or a guide for people that either one to learn about the industry from the bare basics all the way up to getting nerdy about racking systems and sprinklers and everything that you need to know about industrial real estate. And yeah, that's been a, that's been a fun journey as well. Available on Amazon and all the other major booksellers too.

26:17 If people want to I I am not blowing smoke when I say you put out the best social media content on warehousing. If people want to find you or follow you on the social channels where what are they looking up? Yeah, Linkedin's just my name, Chad Griffiths, and Twitter's this X got to stop calling it. Twitter X is the same, just Chad Griffiths. And I don't post all the time because I don't. I try not to just post for the sake of posting. I try to only post when I have something insightful to say. And sometimes that's not very often at all. I could go several weeks before I post something on Twitter because or on LinkedIn. Sorry because I just have nothing to say.

26:58 But when I do have something to say, I'd hope that it is at least somewhat valuable for someone to to read it. Is 100%. So thank you for all your contributions to the industrial real estate World Wide Web that connected us faithfully a few years ago. Well, likewise. To you, a big kudos to you. That's the reason I reached out to you that first time to to be guest in the on my podcast was your influence in the space and you are a absolute rock star in this and everything that you've done and the value that you've created for for people out there on this podcast and social media. I couldn't sing your praises enough. And I, I do whenever I have an opportunity. I what I you should almost make a theme song like the Viva Las Vegas. I was thinking this a Viva Las Vegas and you might need to hire a singer that could be your opening Aviva Las Vegas. It's pretty good.

27:50 Good. But yeah, you're awesome. It's I am a big fan of everything that you do and it's it was an honor coming on your podcast as well. The. Feeling is mutual. Everybody go pick up the book. Listen to the Industrial Real Estate Podcast and for everybody listening, we'll see you next week. That's a wrap for this week on commercial real estate secrets. If you found value, do us a favor and subscribe, leave a review and share it with a fellow commercial real estate lover. For brokerage services or to connect, visit warehousehotline.com. I'm Aviva. We'll see you next week.