Short-Term Leasing Gains Ground in Industrial Real Estate as Tenants Prioritize Flexibility

Short-Term Leasing Gains Ground in Industrial Real Estate as Tenants Prioritize Flexibility

Industrial real estate has moved past the pandemic-era scramble for long-hold warehouse space, and the tenants filling today’s buildings want something different: shorter commitments, adaptable footprints, and locations that trim freight costs.

The shift is showing up in leasing data. CBRE Group‘s mid-year industrial outlook found leasing by third-party logistics providers up 19% year over year, with 3PLs on track to represent more than 35% of U.S. industrial leasing in 2026. The report noted that many of these occupiers seek shorter lease terms, smaller spaces, and more flexible arrangements. CBRE’s occupier survey separately ranked lease flexibility among the top criteria in building selection.

Transportation economics are a key driver. Freight typically makes up roughly 45% to 70% of total logistics costs, while fixed facility expenses like rent account for just 3% to 6%, according to CBRE. That gap can justify adding a well-located warehouse on a temporary basis if it shortens delivery distances.

On-demand warehousing remains a niche within the broader industrial market, but it is growing around ultra-short commitments. A Mordor Intelligence study estimated that storage arrangements lasting less than a month made up more than half of the on-demand sector in 2025.

One company built around this demand is Warehub, founded by James Holbrook. The platform standardizes short-term industrial leases of up to one year, letting landlords generate revenue on space between long-term tenants while giving occupiers temporary distribution capacity. Holbrook said the concept emerged from more than 2,500 transactions completed during the platform’s research-and-development phase. Warehub reports it has since onboarded more than 52 million square feet of industrial space nationwide.

In an interview with Commercial Observer, Holbrook argued that traditional industrial real estate was structured around long-term leases even as transportation dominates logistics budgets, creating a mismatch the market is now working to address. The conversation touched on how flexible warehouse space fits into supply-chain networks, the opportunity created by elevated vacancy, and whether short-term leasing reflects a temporary cycle or a durable change in how industrial space is consumed.

CBRE shares closed at $138.56, essentially flat on the day, valuing the commercial real estate services firm at roughly $40.5 billion.

What to watch

• CBRE’s upcoming quarterly earnings and any updates to its industrial outlook figures on 3PL leasing share.
• Future editions of CBRE’s occupier survey tracking how lease flexibility ranks among tenant priorities.
• Growth metrics from on-demand warehousing platforms, including total square footage onboarded and transaction volume.

Source: original release