Ask A Broker: What Are Today’s Industrial Tenants Looking For?

For this edition of Ask a Broker, we sat down with Michael Coppola, Senior Vice President at NAI Burns Scalo. Specializing in industrial and office real estate throughout Florida, Michael works closely with tenants, landlords, and investors to navigate market trends, leasing strategies, and complex occupancy decisions across the Tampa Bay region.  

Tampa Industrial Market Overview 

The Tampa Bay industrial market is transitioning from the rapid expansion of recent years into a period of normalization. Fueled by population growth, e-commerce expansion, and strong demand from logistics and distribution users, the region experienced a surge in leasing activity, rising rents, and significant new development. Following that wave of growth, vacancy and availability have gradually increased, giving tenants more options than they had during the exceptionally tight conditions of 2021 through 2023. However, rising rents, insurance costs, and operating expenses continue to influence decision-making across the market.  

As tenants balance cost considerations with operational efficiency, building functionality, and long-term flexibility have become just as important as location and rental rates. 

What Are Today’s Industrial Tenants Looking For? 

Industrial tenants have more options available today than they did during the record-low vacancy conditions of 2021 through 2023. However, that doesn’t mean finding the right space has become easier. 

According to Michael Coppola, industrial users are placing increased emphasis on a property’s functionality and ability to support future operations rather than simply securing available space. 

Functionality Comes First 

When searching for industrial space, tenants are prioritizing features that directly impact efficiency and productivity.  

“Right now, it really comes down to three things: clear height, power capacity, and location relative to labor and logistics routes,” says Coppola. 

Access to adequate power has become especially important as more companies incorporate automation, advanced manufacturing processes, and technology-driven operations. Building specifications that may have been considered acceptable several years ago are increasingly being viewed as limitations.  

As newer, state-of-the-art facilities continue entering the market, tenants are becoming less willing to compromise on critical operational requirements. 

Tenants Are More Selective Than Ever 

During the height of the pandemic-driven industrial boom, many occupiers secured space simply because inventory was scarce.  

Today’s environment looks very different.  

“Back in 2021 and 2022, it was take it or leave it,” Coppola explains. “Now, tenants are asking hard questions about building specs, sustainability features, and total occupancy costs, not just face rent.” 

This shift is being driven by both increased availability and greater awareness of how facility quality impacts long-term operations. Businesses are evaluating properties more carefully and comparing multiple options before making decisions.  

Rent Matters, But It’s Not the Whole Story 

While rental rates remain a major consideration, tenants are paying closer attention to the total cost of occupancy.  

Many companies whose leases were signed five years ago are now facing substantially higher renewal costs due to years of elevated demand and limited construction activity.  

In addition to rent, companies are evaluating: 

• – Power capacity 
• – Labor availability 
• – Transportation access 
• – Insurance costs 
• – Operating expenses 
• – Expansion flexibility 
• – Tenant improvement allowances 
• – Lease escalation structures 

Coppola notes that lease escalations have become a particularly important consideration. 

“A few years ago, I’d be able to negotiate 2% to 2.5% annual escalations. For the last few years, landlords have held firm on 4%, and some are even at 5% bumps year over year so what you pay today, will be a much different overall cost four or five years into your lease.” 

As a result, businesses are increasingly focused on understanding the full financial impact of a lease over its entire term.  

Not Every Tenant Faces the Same Market 

While overall vacancy has increased across the Tampa Bay industrial market, availability varies significantly by product type. 

Larger blocks of space have become more attainable, but small-bay industrial properties in desirable infill locations remain highly competitive. A business searching for 5,000 square feet may face a very different set of challenges than a third-party logistics provider looking for 200,000 square feet. 

Understanding those differences is critical when evaluating opportunities and establishing realistic expectations around timing, availability, and negotiating leverage. 

Common Mistakes Tenants Make 

One of the biggest mistakes Coppola sees is tenants waiting too long to begin the search process.  

“Tenants often start their search three to four months out when they really need nine to twelve months, especially if there’s any buildout involved.” 

Another common mistake is evaluating properties primarily on rental rates rather than operational performance. 

A building with lower rent but inadequate electrical infrastructure, limited dock access, or operational inefficiencies may ultimately cost more than a higher-priced facility that better supports the business. 

Coppola also encourages tenants to clearly define their requirements before entering the market. Factors such as power capacity, dock ratios, clear height, trailer storage, and workflow needs can significantly impact whether a facility will support future growth. 

Finally, tenants should recognize that negotiating conditions can vary dramatically across different segments of the market. While vacancy has increased overall, highly desirable small-bay industrial space remains competitive in many locations.  

Looking Ahead 

Coppola expects the market to remain active but increasingly focused on quality and functionality. 

“The flight to quality is going to continue,” says Coppola. “Tenants have become more educated about what modern industrial facilities can offer, and that will continue to influence leasing decisions.” 

Over the next 12 to 24 months, Coppola expects several trends to continue shaping tenant demand: 

• – Continued preference for newer, high-quality facilities 
• – Strong demand for small-bay industrial space 
• – Growing emphasis on power and operational infrastructure 
• – Increased focus on long-term occupancy costs 
• – Gradual tightening of available large-format space as new construction slows 

While industrial tenants have more choices today than they did several years ago, successful site selection still starts with understanding operational needs and planning early.  

The businesses that navigate today’s market most effectively are often the ones that enter the process with clearly defined operational priorities, a strong understanding of their long-term needs, and enough time to evaluate all available options.  

About NAI Burns Scalo  
NAI Burns Scalo, an investment and advisory organization headquartered in Pittsburgh, Pennsylvania, is an integral part of NAI Global, which spans over 325 offices across 55 countries. Currently with offices in Florida, Pennsylvania, and West Virginia, our strategic positioning ensures exceptional outcomes for clients with access to over 6,000 professionals worldwide. With nearly 100 dedicated specialists, we seamlessly integrate into this expansive network, excelling both locally and globally.  

Since 1956, we’ve been at the forefront of providing commercial real estate services such as brokerage, property management, development, and construction. We’ve learned the ropes, navigated the tides, and honed expertise that only comes from over six decades of experience. This is about more than just finding a commercial space for your business. It’s about delivering life-changing real estate experiences to propel you forward. To learn more, visit NAIBurnsScalo.com.