Industrial Real Estate Booms in 2026 While Offices Struggle: What Investors Need to Know

If you own a commercial property in Franklin County right now, you've likely already felt the shift — even if you haven't put words to it yet.

A tenant who used to need an entire floor now wants half of it. A warehouse that sat vacant three years ago now has a waitlist.

The commercial real estate landscape across Missouri's Franklin County, St. Charles, and the broader St. Louis metro is actively reorganizing itself — and the investors who understand why are already positioning themselves ahead of the curve.

At Dolan Realtors, we've been working with property owners and investors in Franklin County since 1908.

What we're seeing right now is one of the clearest sector divergences in decades — industrial is pulling ahead, and traditional office is facing a fundamental rethink.

This guide breaks down what's actually happening, what it means for your specific situation, and how to make smarter decisions with the assets you already hold or the ones you're considering.

The Franklin County Market Right Now — Real Numbers, Not Headlines

Before we get into strategy, let's anchor this in what's actually happening locally.

According to Colliers' Q4 2025 report, the St. Louis regional industrial market ended 2025 with a vacancy rate of just 5.8% — a figure that has held remarkably steady despite broader economic uncertainty.

The market recorded 446,000 square feet of positive net absorption for the year, leasing activity surged in Q4 to 1.86 million square feet, and the construction pipeline remains modest at just 3 million square feet — not nearly enough to flood the market.

St. Charles County — directly adjacent to Franklin County along I-70 — posted some of the strongest vacancy improvements in the entire region.

A major new industrial delivery is on the horizon: Whirlpool's 551,200-square-foot facility coming online in early 2026, a signal that institutional tenants are making long-term commitments in this market.

Office? The story is different.

Remote and hybrid work patterns have structurally reduced daily occupancy across Missouri's suburban markets.

Older buildings without modern amenities are sitting longer, asking rents are under pressure, and tenants who are renewing are often downsizing in the process.

So the question isn't whether the shift is real — it clearly is.

The question is: what does it mean specifically for you as a Franklin County investor or property owner?

A Tale of Two Sectors — And Why It Matters to You Personally

The industrial sector is being driven by something that isn't going away: the permanent restructuring of how goods move.

E-commerce fulfillment, regional distribution, just-in-time logistics, and light manufacturing all need physical space — and they need it close to population centers with strong highway access.

Franklin County, sitting along I-44 and Route 50 with direct connectivity to the St. Louis metro, is genuinely well-positioned for this demand.

Industrial buildings in this corridor tend to lease quickly, attract tenants who sign longer terms, and operate under triple-net lease structures — meaning your tenants typically cover utilities, insurance, and property taxes themselves.

For a Franklin County investor, that translates to more predictable income, fewer surprise expenses, and dramatically less day-to-day management burden than a comparable office asset.

The office sector, meanwhile, is not dead — but it is selective.

Companies are still leasing office space, but they want less of it, in better locations, with more flexibility.

The suburban office buildings that struggle most are large, dated, and designed around a 2010 vision of work.

If that describes something in your portfolio, the honest truth is that a strategy rethink is overdue — and the sooner you address it, the more options you have.

Which side of this divide does your current portfolio sit on — and do you know your exposure clearly enough to act on it?

What This Means If You Own Office Property in Franklin County

Let's be direct.

If you own a suburban office building in the Union, Washington, or Pacific corridor and you've seen vacancies rise or tenants negotiate harder on renewals, you're not imagining it — and you're not alone.

The question isn't whether to worry; it's whether to adapt, reposition, or reallocate.

Here are three realistic paths investors in this position are taking right now:

• The first is reconfiguration for smaller tenants. Rather than waiting for one large tenant to fill an entire floor, many Franklin County owners are subdividing large suites into smaller, more flexible spaces.
• Healthcare providers, professional services firms, and growing small businesses in the area are actively seeking 800–2,000 square foot units — a size that simply doesn't exist in most older suburban office buildings without renovation.
• A moderate investment in this kind of reconfiguration can dramatically expand your tenant pool.
• The second is mixed-use repositioning. Some office buildings in Franklin County sit on parcels zoned for light commercial or mixed-use.
• If your building is in that category, a conversation with a local commercial specialist about partial conversion — storage, flex space, or even service-oriented retail on the ground floor — could meaningfully change the asset's income profile.
• The third is strategic disposition. If the building's location, age, and condition make repositioning impractical, selling into a market that still has active buyers — and reallocating those proceeds into an industrial asset — is a legitimate and often smart move.
• Dolan Realtors' commercial team can walk you through a realistic assessment of which path fits your specific property.

Before you decide anything, though — do you know what your office property's true current market value is in a 2026 environment?

What This Means If You're Considering Industrial Investment in Franklin County

If industrial is on your radar, the St. Louis regional data gives you a reasonably clear signal: demand is real, vacancy is tight, and the construction pipeline is not aggressive enough to create oversupply in the near term.

For Franklin County specifically, the I-44 corridor and parcels near Union and Washington with highway access or rail proximity are the most strategically attractive targets.

Industrial properties in this market typically offer several structural advantages for local investors.

• Triple-net leases shift operating cost risk to tenants.
• The buildings themselves are simpler — wide open floors, high ceilings, loading docks — meaning they age better than offices and require less capital expenditure to remain competitive.
• A warehouse built in 2010 can still serve a 2026 tenant without a lobby renovation or a technology infrastructure overhaul.

That said, industrial is not a guaranteed play.

Rental rates in the St. Louis market trended down through 2025 — from $6.22 to $5.93 per square foot — as new supply came online and tenants gained more negotiating leverage.

That's not alarming at current vacancy levels, but it does mean the "just buy anything industrial" instinct needs to be replaced with disciplined underwriting.

Location quality, building spec, and tenant creditworthiness matter more than ever.

The investors winning right now in this market are the ones who know the Franklin County submarket intimately — which parcels are near planned infrastructure, which tenants are actively looking, and where supply gaps exist.

That's exactly the kind of ground-level intelligence Dolan Realtors brings to every commercial conversation.

Are you looking at the right parcels — or just the available ones?

The Washington, MO Investor Scenario — A Real-World Illustration

Consider a Franklin County investor who owned a two-story office building in Washington, MO.

After 2022, two of three long-term tenants either left or significantly downsized their footprint.

Rather than accepting prolonged vacancy and carrying costs, he worked with a local commercial advisor to take two targeted steps.

First, one floor was reconfigured into smaller professional suites — targeting healthcare and service businesses actively seeking space in Washington's growing commercial corridor.

Shared meeting rooms were added to increase the building's appeal to smaller tenants who needed occasional conference space without committing to it full-time.

The floor filled within eight months.

Second, he used the proceeds from selling the other floor to acquire a small warehouse near a Route 50 interchange in St. Charles County — a single long-term manufacturing tenant, triple-net lease, minimal management required.

The result: a repositioned office asset generating steady income from a diversified tenant mix, combined with a new industrial holding providing stable, low-maintenance cash flow.

This kind of move isn't available to everyone — it requires local market knowledge, the right timing, and trusted advisors who know both sides of the transaction.

But it illustrates exactly what thoughtful, locally-informed decision-making looks like in today's Franklin County commercial market.

Could a similar repositioning strategy apply to something in your portfolio?

Thinking Ahead: How to Navigate Your Next Move

The single most valuable thing you can do right now is get a clear, honest picture of where your commercial holdings actually stand — not where you think they stand based on what you paid or what they were worth in 2019.

Markets have moved. Some assets have moved favorably; others haven't.

Knowing the difference is the starting point for every smart decision that follows.

A few principles worth holding as you assess your position.

• First, local intelligence beats national headlines.
• Second, flexibility in lease structure is currently more valuable than top-line rent.
• Third, diversification across sector types reduces your exposure to any single trend.

What does your current commercial portfolio actually look like when you map it against these principles honestly?

So, Industrial or Office — Which Is Right for You in 2026?

Here's the honest answer: it depends on what you already own, what your capital position allows, and what your management bandwidth looks like.

There's no universal right answer — but there is a right answer for your situation, and getting to it requires a conversation grounded in local Franklin County market reality, not national trend pieces.

What we can say with confidence is this: industrial in the Franklin County and greater St. Louis corridor is operating from a position of genuine fundamental strength heading into 2026.

Office is not obsolete, but it requires more active management, more strategic thinking, and more willingness to adapt than it did five years ago.

The investors who treat that reality seriously — rather than hoping the market reverts — are the ones building durable, income-producing portfolios.

Dolan Realtors has been helping Franklin County investors navigate commercial real estate decisions since 1908.

We are the largest privately owned real estate company in Franklin County — with offices in Union, Washington, Pacific, St. Clair, and Gerald — and our commercial team works with buyers, sellers, and owners across the industrial and office spectrum every day.

We know this market because we live and work in it.

Ready to get a clear picture of where your commercial property stands — and what your smartest next move looks like?

Contact Dolan Realtors today for a no-obligation commercial consultation.

Local knowledge, honest advice, and a conversation that starts with your goals — not ours.

📞 Call Dolan and Start Packing — dolanrealtors.com Offices in Union, Washington, Pacific, St. Clair & Gerald, Missouri

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