The National Industrial Market Is Shifting. Here Is What It Means Locally.

The national industrial real estate market is at an interesting point, and if you own, lease, or are considering industrial or flex space in Roanoke, Salem, Botetourt, or the New River Valley, it is worth paying attention.

According to CoStar, national industrial vacancy is expected to rise in 2026. The primary reason is not a collapse in demand. It’s supply. Between 2020 and 2024, developers delivered roughly 2.1 billion square feet of industrial space nationwide, expanding total inventory by nearly 13%. Another 200 million square feet is expected to come online this year.

That sounds alarming, but the national headline does not tell the whole story. It certainly does not tell our story in Southwest Virginia.

Where the Pressure Really Is

Most of the vacancy pressure is concentrated in large-format distribution buildings, especially facilities between 200,000 and 750,000 square feet. That segment is carrying an elevated vacancy rate as many of the big speculative warehouses built during the post pandemic e-commerce and supply chain boom are now working through the market.

That is not the Roanoke Valley. Not Salem, Botetourt, nor the New River Valley. Our market has always been different.

Why Southwest Virginia Is Holding Up

The industrial and flex inventory in our region is primarily small to mid-bay product: That means its functional space used every day by contractors, light manufacturers, distributors, service companies, and last-mile operators. Nationally, that segment is outperforming the broader industrial market, with properties between 10,000 and 50,000 square feet showing much tighter vacancy.

Locally, we mirror that trend. We did not see the same speculative construction wave that hit larger logistics corridors. Most of what was built here was driven by specific users, real demand, and practical economics. That discipline (we call it “low risk tolerance”) has kept supply in check.

At the same time, our demand story is getting stronger. Google has confirmed its plans for the data center campus in Botetourt County, with reports indicating a potential multibillion-dollar investment at the Botetourt Center at Greenfield. That kind of project does more than create direct jobs. It validates the region’s infrastructure, labor force, land position, and long-term relevance for technology-driven users.

Botetourt is also seeing momentum around Gateway Crossing near I-81’s Exit 150, where the county has approved a performance-based agreement to support a potential national destination retailer. Whether that project ultimately becomes Costco (this is the rumor not my insider info) or another major user, the larger point is the same: outside capital is paying attention to this corridor.

Add in the New River Valley’s Virginia Tech anchor, advanced manufacturing base, and continued demand for flex and light industrial space, and the local picture looks very different from the national headline.

Why This Matters for Buyers and Sellers

For buyers, the setup is compelling. New industrial construction nationally is projected to slow meaningfully from its 2023 peak, and locally there is limited new product in the pipeline. Well-located industrial and flex assets should remain attractive, particularly as tenants continue to seek functional, right-sized space.

For sellers, this may also be an excellent window. Owner-users and investors who bought industrial or flex property over the past decade have seen meaningful appreciation. Demand for small-bay and flex product remains strong, and limited new construction has helped support pricing.

One thing I have learned from living and working in the Roanoke Valley for the last quarter century is that national trends often show up here on a 3-5 year lag. I would not be surprised to see more industrial, warehouse, and flex construction in our region over the next several years. If that happens, today’s tight supply-demand balance could begin to loosen.

So, if you are thinking about selling in the next five years, it may be worth asking whether now is the better time.

The IREP Perspective

At Investors Real Estate Partners, we work statewide, but our backyard expertise is Roanoke, Salem, Botetourt, the New River Valley, and Southside Virginia. We know the inventory. We know the tenants looking for space. And we know the buyers actively pursuing industrial and flex assets in this region.

National headlines create uncertainty. Local knowledge creates opportunity.

If you own industrial or flex property and want to understand what it may be worth today, or if you are looking to acquire in our region, we would welcome the conversation.

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