Micro-Flex Industrial Comes into Its Own: Q&A With Method Architecture’s Eric Hudson

Pictured: Rendering of South Austin Commerce Center, Buda, TX. Designed by Method Architecture.

Not so long ago, the industrial mantra was “bigger is better.” But things have changed in recent years, with micro-flex industrial buildings starting to attract interest. ConnectCRE asked Eric Hudson, Partner and industrial leader at Method Architecture, about factors that have led to this smaller building design.

ConnectCRE: What is a micro-flex industrial building?

Eric Hudson: A micro-flex facility is typically a pre-engineered metal building (PEMB) or tilt-wall structure, often ranging from 15,000 to 40,000 square feet for a single-tenant building. This facility also has bay depths of 120-200 feet. Many are crane-ready with 5- to 20-ton capacity and can include outside storage or laydown yards.

For comparison, larger bulk distribution buildings are 100,000-500,000+ square feet with bay depths of 250 feet and more.

While zoning and classifications vary by municipality, these facilities accommodate light industrial uses with an emphasis on flexibility. Other names this development type goes by are small-bay or shallow-bay buildings.

ConnectCRE: Who are the primary users?

Eric Hudson: Users are a mix of light manufacturers and fabricators: woodworking shops, metal finishing, small-scale assembly, and machine shops. Beyond that, these facilities are well-suited for trade contractors, food and beverage packaging, and showroom/warehouse combinations.

These tenants benefit because the design prioritizes grade-level loading, flexible office buildouts, and outside yard space. This supports operations with fewer 18-wheeler deliveries and more specialized equipment needs.

ConnectCRE: Is the micro-flex trend new?

Eric Hudson: No. It has existed for decades in various forms, but historically was difficult to capitalize because institutional investors and developers focused on larger-scale industrial projects that offered higher returns. What is new is the resurgence of interest and demand.

ConnectCRE: What’s driving that demand?

Eric Hudson: Recent shifts in trade and tariff policies have made offshoring and outsourcing less attractive. Meanwhile, manufacturing is seeing renewed momentum, and with 98% of all manufacturing companies classified as small businesses, there’s an outsized need for smaller industrial spaces.

Micro-flex buildings support small, local manufacturers who need modest footprints, shorter lease terms, and, in many cases, infill sites that allow them to stay closer to customers and suppliers.

Another demand driver is that much of the existing small-bay inventory is outdated. Many older buildings lack the modern power, data and layout requirements that today’s manufacturers and trades need, making the new wave of small-bay development attractive.

Additionally, the upfront investment in equipment is substantial for many manufacturing tenants. Recent tax incentives under Section 179 of the One Big Beautiful Bill Act allow these companies to fully deduct large equipment purchases, making it easier for small users to launch operations in micro-flex spaces.

ConnectCRE: What should developers consider when developing small-bay facilities?

Eric Hudson: Flexibility for one thing. Typical specs involve 20-32-foot clear heights, 80-120-foot building depths and 2,000-5,000-square-foot office buildouts. Grade-level loading with a single-dock option is also necessary.

While parking demands might be lighter than those connected with large distribution centers, traffic flow, floor-area ratio, and site layout are critical. Today’s tenants also need power, data and flexibility.

Finally, success in this sector depends on understanding local market conditions. Tenant needs can vary significantly by region, so tailoring building design to match the leasing market is essential.

ConnectCRE: What’s the outlook for this industrial sub-sector?

Eric Hudson: Domestic manufacturing incentives, combined with historically low vacancy for this product type, point to continued growth. Larger institutional industrial developers often target three to four tenants in large 150,000-400,000 square-foot buildings, making the average tenant size 50,000-80,000 square feet. This leaves an unmet need for the smaller users that micro-flex targets.

But growth could be tempered by capital considerations. Smaller returns and longer hold periods make micro-flex less attractive to institutional investors. The expansion of this product type will rely on developers with a dedicated focus and longer-term vision.