When “IT WORKED BEFORE” STOPS BEING A VALID BENCHMARK
In industrial real estate, owners often rely on a simple and reasonable benchmark: what worked before should still work today. For decades, this logic held up. Buildings that functioned well for prior tenants, sometimes for many years, were assumed to remain viable as long as the structure itself hadn’t changed.
What’s become less obvious is how quickly tenant behavior, regulatory enforcement, and operational expectations have evolved. When those shifts outpace the original design intent of a building, historical success can become a misleading reference point rather than a reliable guide.
When prior use creates confirmation bias
Many industrial buildings that struggle today were not poorly designed when they were built. They were optimized for a different era of demand.
In this case, the property had housed a variety of users long before it was listed—ranging from government-related distribution to manufacturing and light industrial uses. Those operations functioned within the building’s constraints, often with workarounds that were acceptable at the time. From an owner’s perspective, the logic was straightforward: if prior tenants operated successfully, the building should still be functional for similar uses.
That assumption is rooted in lived experience. The problem arises when similar use no longer means similar operations.
Market transitions aren’t obvious
As industrial demand has shifted toward higher-velocity distribution, e-commerce, and storage-intensive users, two things have changed simultaneously:
Operational demands increased
Compliance requirements became more rigorous
Fire code enforcement, storage classifications, and operational throughput now matter in ways they didn’t for prior occupants. In many cases, these changes only surface when a tenant attempts to push the building beyond what it historically supported such as applying for high-pile storage permits or maximizing vertical storage.
At that point, owners are often surprised. Not because the building suddenly “failed,” but because the rules and expectations around its use changed quietly over time.
Why visible constraints dominate early screening
Another layer of this transition is how tenants now evaluate space. Most prospective users don’t begin with technical diligence. They begin with what they can immediately see.
Loading configuration, dock access, and throughput capacity often act as first-order filters. Buildings that fall short at this stage are frequently eliminated before deeper questions like fire sprinkler density or system pressure are ever discussed.
This is why properties can experience extended marketing periods even when priced competitively. The issue isn’t that technical constraints don’t matter; it’s that many tenants never reach the point where those constraints are evaluated.
pricing alone doesn’t always resolve misalignment
When demand shifts, pricing adjustments are often the first response. While necessary, pricing alone rarely corrects a mismatch between a building’s design intent and prevailing tenant expectations.
In softer markets with increased supply, functional constraints become more pronounced. Tenants have more options, and buildings that require operational compromises are screened out faster. The result is longer marketing time not because the asset is fundamentally flawed, but because its reference point no longer matches the dominant tenant profile.
The broader takeaway for property owners
Industrial buildings become harder to lease when historical reference points no longer reflect how tenants evaluate space today.
Understanding how tenants make decisions has changed and is often more important than focusing on what worked in the past. As markets evolve, prior functionality should be treated as context, not as a guarantee of future demand.
For owners navigating these transitions, the challenge isn’t deciding whether the building was good or bad. It’s recognizing when the market has moved on, and recalibrating expectations accordingly.