Manufacturing’s Missing Buyers: Why Owner-User Industrial Stopped Trading

By every measure the quarterly reports lead with, Salt Lake industrial is recovering. Vacancy has come down roughly 80 basis points over the past year to 7.8%. Net absorption over the trailing twelve months is 2.9 million square feet. Asking rent growth turned positive again at 1.9% annually. Deliveries have collapsed to about 1.5 million square feet, the lowest annual total since 2016, which means the supply wave that pushed vacancy to a record in late 2025 has stopped arriving.

All of that is true. And if you have spent this year trying to sell a 40,000-square-foot manufacturing building, none of it describes your experience. The recovery is showing up in occupancy. It is not showing up in transactions.

A third fewer deals than normal

Between 2015 and 2019, this market completed an average of 285 arms-length industrial sales a year. That was the steady state — roughly 5.4% of inventory turning over annually. 2021 ran hot at 385. Then the rate environment changed and the count fell off a cliff: 239 in 2022, 169 in 2023, 165 in 2024. Turnover bottomed at 2.2%, which means better than nineteen of every twenty buildings in the market did not trade that year.

2025 looked like the turn — 224 sales, turnover back to 4.1%. Through October 20 of this year, 147 sales have been recorded. Current-year counts always fill in late, so the final 2026 number will finish above a straight annualization, but the pace points somewhere near 180 to 200. Better than 2024. Still roughly a third below what this market does in an ordinary year.

Where the buyers went

Split the market by building type and the shortfall is not evenly distributed. Logistics — distribution and warehouse product — averaged 143 sales a year before the pandemic, bottomed at 72 in 2023, and is pacing near 97 this year. Down meaningfully, but functioning. Flex has effectively healed: a pre-pandemic average of 52, a trough of 25 in 2024, and a 2026 pace around 51. It is the only segment running at its historical norm, and the only one ahead of where it was last year.

Manufacturing is the outlier. Specialized industrial — owner-user production and processing buildings — averaged 90 sales a year through the back half of the last decade. It bottomed at 43 in 2024, recovered to 59 in 2025, and has recorded 28 sales through October this year. That is a pace near 35: roughly 60% below the historical norm and about 40% below last year. While the rest of the market slowly rebuilds transaction volume, manufacturing is moving the other direction.

It is not a demand problem

The obvious explanation would be that nobody wants these buildings. The occupancy data says otherwise. Specialized industrial vacancy is 4.7% — tighter than the overall market by three full points, and far tighter than logistics at 9.4%. The category posted positive net absorption of roughly 171,000 square feet over the trailing year. Asking rents run $12.60 per square foot, the second highest of the three categories. These buildings are full, they are leasing, and they command a premium.

They just do not sell.

Two different markets, both stuck

Treating this as one sales market hides what is actually going on, because manufacturing buildings sell to two completely different buyers for completely different reasons. An investment buyer wants income from a leased building. An owner-user wants somewhere to run a business. Both have stepped back — and not for the same reason.

The investment side has gone quiet enough to stop producing a price

Here is the clearest single piece of evidence in the data. For a category to publish an average cap rate, there have to be enough arms-length sales of income-producing buildings in it to compute one. Across the eleven years from 2015 through 2025, specialized industrial produced that number in every year but two — 2023 and 2024, both blank. Through October this year it is blank again. Logistics has produced a cap rate every single year without exception, 6.7% this year against 6.5% last. Flex has produced one every year since 2019. Manufacturing is the only category in this market that has gone dark on investment pricing in the current cycle.

When a number does print, the gap is instructive. The last reportable manufacturing cap rate was 6.0%, in 2025, against a modeled market cap rate for the category of 7.7%. That 170-basis-point spread is wider than logistics, where transactions at 6.5% sit against a 7.4% market rate. Translated: the few manufacturing income deals that clear are the exceptional ones — strong credit, long term remaining, a building the next user could actually take — and anything priced where the market genuinely values the category is sitting unsold.

The reason is structural. An income-producing manufacturing building is a single-tenant, special-purpose asset. Underwriting it means underwriting what happens when that tenant leaves a building configured around one company’s process — the power service, the floor loads, the clear heights, the crane rails, the drains. At 2021 capital costs that risk was priceable. At today’s, required returns on special-purpose single-tenant product widen faster than on generic distribution space, because the downside is re-tenanting a building that may not suit the next user without real capital. Buyers want to be paid for that risk. Sellers are not interested in paying it. So nothing trades.

The owner-user side is a financing problem, not a pricing one

What remains of the manufacturing sales market is owner-users — the business buying the building it operates in. Different transaction, different obstacle, and the numbers look different too. The 28 manufacturing sales recorded this year carry an average disclosed price near $2.3 million at roughly $324 per square foot, which implies buildings averaging around 7,000 square feet. Small, private, frequently closing without reported pricing at all. These are companies buying their own four walls, not investors buying income.

Their obstacle is not a cap rate spread — an owner-user is not buying a yield. It is debt service measured against the alternative. The owner-user pool is the most financing-sensitive buyer group in commercial real estate and the least able to cover a higher rate with equity. When the monthly cost of owning runs well ahead of the monthly cost of leasing a comparable building, the rational move is to sign a lease and leave the capital in the business. That is exactly what has been happening, and it shows up on the other side of the ledger: specialized industrial posted positive net absorption of roughly 171,000 square feet over the trailing year. Demand for these buildings is real. It is arriving as tenants instead of buyers.

On the sell side, the mirror image. The owner of a manufacturing building is usually the business inside it — no fund life, no lender pressing, no redemption queue. They financed in 2021 or earlier and have no reason to accept a price set by today’s cost of capital. They can keep running the business and wait, and that is precisely what they are doing.

Thin on both sides, for two unrelated reasons, is how a category ends up carrying 4.7% vacancy and a turnover rate under 3%.

The leasing side tells the same story

Velocity is down even where deals are happening. Space leased in this market during 2026 sat available roughly six months before signing, about triple the pace of the prior cycle. Buildings of 100,000 square feet and up average closer to eight months; space under 50,000 square feet moves in about half that. Occupiers are taking longer to decide, negotiations are running longer, and both sides are underwriting more carefully than they were three years ago. A market can be healthy and slow at the same time. This one is.

What we’d do with this

If you own manufacturing or owner-user product and are thinking about selling, understand the pool you are selling into. Something like 35 buildings in this category will trade in the market this year, against a normal year’s 90. The buyers exist, but there are fewer of them, they are rate-sensitive, and they are selective. Price to the pool actually in the market, give the listing a realistic runway — six to nine months, not ninety days — and expect a buyer who needs the building to work for their operation rather than for a spreadsheet. Pricing to 2021 comps is a large part of why so little trades.

If you are buying, this is the least competition for owner-user industrial in a decade, on exactly the product that almost never comes available. Occupancy fundamentals are the strongest in the market and asking rents support them. The constraint is financing, not the asset — which means the buyer who solves the capital question faces very little competition for a tight, well-leased category.

And if you are underwriting industrial as an asset class, stop using blended market statistics. A market averaging 7.8% vacancy and 2.9 million feet of absorption describes logistics working through its supply wave. It does not describe the manufacturing segment at all, where occupancy is tight, rents are high, and the only thing broken is liquidity.

If you own manufacturing or owner-user industrial in the Salt Lake market and want to know what it would actually trade for today — and what the realistic buyer pool looks like for your specific building — that is a short conversation. Reach out.

NEXUS analysis of Q3 2026 Salt Lake industrial survey data, current as of October 20, 2026. Transaction counts reflect the surveyed Salt Lake industrial market, which extends west into Tooele County — roughly 3.7% of surveyed square footage and 130 of 5,189 buildings. Current-year counts are incomplete; recorded transactions continue to fill in for several months after close, so 2026 figures are a pace rather than a total. Average sale price reflects transactions with disclosed pricing. Manufacturing refers to the specialized industrial category — owner-user production and processing buildings — as distinct from logistics and flex. Information herein is deemed reliable but not guaranteed. This article is market commentary, not investment advice; verify all figures independently before relying on them in a transaction.