Salt Lake City’s small-bay logistics scene has flipped from packed to plenty in just a few years. The sub-50,000-square-foot warehouses and flex buildings that keep local contractors, last-mile e-commerce operators and small distributors moving used to be almost impossible to lock down. Now, entire blocks of compact suites are being marketed at once, and tenants who once had to take space on a landlord’s terms say they finally have leverage on rents and tenant improvements. It is a sharp reversal for a segment that was recently among the tightest in the Intermountain West.
According to CoStar, the small-bay vacancy rate in Salt Lake City has climbed to roughly 10.9%, up from about 4.4% at the end of 2022. That spike is well ahead of the broader industrial market, where Newmark’s Q4 2025 market report puts direct industrial vacancy closer to the mid-single digits and calls out elevated sublease inventory. Brokers and developers largely blame the small-bay cooldown on two forces hitting at once: a surge of sublease space and steady new deliveries.
Sublease Flood and New Deliveries
Independent market write-ups show how quickly the sublease wave rolled in. Hughes Marino reported that sublease availability ballooned from roughly 62,000 square feet in 2022 to nearly 2.8 million square feet by mid-2024. At the same time, CBRE notes that roughly 2.5 million square feet of industrial product was delivered in 2025, even as leasing activity for the year totaled about 12 million square feet. The combo of new supply and recycled space has left multiple small-bay suites either sitting vacant or being marketed on cut-rate sublease terms.
What It Means For Tenants And Landlords
With more options on the table, tenants are suddenly seeing concession packages, shorter commitments and tenant improvement allowances that were rare during the 2020 to 2022 boom. Newmark says landlords are increasingly relying on tenant improvement packages and other concessions to stand out, while higher-quality Class A product continues to outperform older stock. For small operators, that can mean lower effective rents or near turnkey sublease deals, though brokers caution that this tenant-friendly stretch may be temporary…