The Industrial OM Assumptions That Expired in 2026

The industrial lease spread — the gap between what tenants are paying and what new leases are going for — was $2.20 per square foot a year ago. Now it's $1.28. That's the national average, which doesn't apply uniformly across every market. But buyers with fresh comp data know where your submarket sits. If your offering memorandum doesn't address it, they will.

That single data point changes what an industrial offering memorandum needs to say.

A year ago, the document wrote itself. Vacancy was near historic lows. New supply was still burning off. Tenants rolling off old leases were stepping up significantly to market rents. The NOI growth story was built into the math: time plus lease expiration equals upside. An OM could lead with that and most buyers accepted the frame.

That market is still good. Industrial is still one of the stronger CRE sectors. But it's not the same market, and a document built on last year's assumptions is going to get challenged by any buyer who's done their homework in the last six months.

What the numbers actually say right now

National industrial vacancy hit 9.6% in Q1 2026 — up 160 basis points year over year. Construction starts are down 63% from the 2022 peak, so new supply isn't the driver of the vacancy increase. The driver is that the rent growth cycle is compressing. The spread between in-place and new-lease rents has fallen from $2.20/SF to $1.28.

The arithmetic looks different than it did. A property with in-place rents at $8.50/SF and 2024 market comps at $10.70 had a $2.20 spread — 26% upside on rollover. That same property today, with comps at $9.78, has a $1.28 spread — 15% upside. The direction is the same, but the magnitude isn't. And for leases rolling in mid-2026, when industrial vacancy is projected to peak, the buyer is underwriting a transition during the highest-risk window in the cycle.

Third-party logistics operators — now 35% or more of industrial leasing activity — have options. They negotiate harder than single-site industrial tenants. They have relationships with multiple landlords across markets. Some are deliberately choosing shorter lease terms specifically because tariff uncertainty is keeping supply chain decisions in flux. That changes the renewal assumption, and the renewal assumption is often the biggest variable in an industrial NOI projection.

What most industrial OMs still look like

The standard industrial offering memorandum was optimized for the 2022–2023 market: tight vacancy, strong absorption, rising rents, limited supply. Most of the document templates in circulation were built for that moment.

So the typical industrial OM today still leads with location, clear heights, power capacity, loading configuration. Then a rent roll with in-place rents and a market comp table projecting meaningful step-up at rollover. Then forward NOI projections with 3–5% annual rent growth.

None of that is false. It's just incomplete in ways buyers are noticing.

When a buyer's analyst pulls fresh comps and sees that the market spread is $1.28 rather than the $2.20 the OM math implies, they do the recalculation themselves. When buyers run their own numbers, they don't assume the seller's upside case. They use the conservative version of the data. That's how it works.

What the rollover section needs to do now

The rollover case still exists. The compression story doesn't mean industrial is impaired — it means the OM has to make the case rather than assume it.

Name the spread. State the current market spread and explain where this property falls within it. If in-place rents are $8.50 and market is $9.78 — say that, and say why the rollover is still realistic. Is this a below-market tenant in a submarket where available options are limited? Is the lease expiring after mid-2026, when vacancy is projected to start correcting? Make the argument. Don't just show the gap and expect the buyer to assume the best.

Address the tenant type. With 3PLs at 35%+ of industrial leasing, tenant type is a material underwriting variable. If your rent roll is heavily weighted toward 3PLs, explain why that's manageable: long average remaining term, documented renewal history, below-market rent that limits churn incentive. If it's a single-tenant manufacturing or distribution operator with 20 years at the location, that's a completely different risk profile — say so.

Use the supply constraint as a forward argument. Construction starts are down 63% from peak. New industrial deliveries are well below the pandemic-era surge. The current vacancy overhang is absorption-driven, not supply-driven — which historically means it corrects faster once demand stabilizes. That's a credible investment thesis for a patient buyer. Put it in the document.

Deal with tariff exposure directly. Buyers are asking about this in due diligence. If the tenant operates in a tariff-sensitive supply chain — automotive, consumer goods, electronics — name it and explain the lease protection. If they're in domestic distribution or last-mile logistics with limited import dependency, that's a positive and it belongs in the investment summary, not buried in a footnote.

The appraisal problem nobody talks about

There's a secondary issue worth understanding. LightBox data from February shows new CRE listings up 28% year over year — but lender appraisals down 10% month over month. Deals are being listed faster than lenders are willing to finance them.

For an industrial deal in 2026, that means the gap between what a seller prices an asset and what a lender will underwrite is a real friction point. An OM that gets ahead of the appraisal questions — documented comp basis, conservative NOI assumptions, explicit cap rate rationale — shortens the deal cycle. One that's working off 2024 comp assumptions is going to hit friction at the financing stage even if it finds a willing buyer at the right price.

The document that closes the deal fastest is the one the buyer's lender doesn't need to argue with.

The broker's job in this market

Industrial isn't struggling. Capital is still looking for it — CRE dry powder is at $585 billion across strategies, and industrial is where most of it wants to go. Investors understand the asset class.

The broker's job is to write a document that a buyer can defend to their investment committee with the market conditions as they actually are in March 2026. That means acknowledging where the spread is, what the vacancy trajectory looks like, and making the specific case for why this asset holds up at the asking price.

An industrial OM from 2024 doesn't do that job. Not because it's wrong — it's just writing to a market that's moved.

The spread is $1.28. Build the document around that number.