Industrial Tenants Now Rank Power Above Rent. Two Landlords Built for It.
By Keith Reynolds | Publisher & Editor, ChargedUp!
JLL's second quarter industrial data shows tenants prioritizing power availability, automation-ready specifications and labor access over discounted rents in older facilities. That is a reordering of leasing criteria, and two landlords have responded by building generation into the asset rather than waiting for the utility. STAG Industrial energized 9 megawatts of rooftop solar across three Pennsylvania warehouses. Prologis built a microgrid at a site where utility service was capped at 55 kilowatts until at least 2035.
Power Displaces Price in the Leasing Decision
Industrial leasing surged to 175.7 million square feet in the second quarter, up 49.4 percent year over year, with national vacancy compressing 60 basis points to 6.8 percent and asking rents advancing to $10.45 per square foot. Big-box leasing above 500,000 square feet rose 58.3 percent. Within that recovery, JLL found flight-to-quality intensifying as tenants prioritized power availability over discounted rents in older facilities.
The pressure behind that preference is measurable. Nearly 90 percent of industrial and logistics companies experienced energy disruption in the past year according to Prologis' 2026 Supply Chain Outlook, and seven in ten executives report fearing power outages more than any other operational risk. Industrial power prices across six major economies rose approximately 18 percent between 2019 and 2024, against 4 percent growth in the preceding five years, and grid connection timelines for large new loads are approaching five years on average in major data center markets.
The pricing consequence is already visible at the top of the market. In Silicon Valley, high-power leases have transacted at rents averaging 49 percent above other leases signed over the past three years, and 33 percent above rents achieved by buildings delivered within the past three years. Power access is outperforming building age as a rent determinant.
STAG Executes at Portfolio Scale
STAG Industrial energized three rooftop solar projects in Pennsylvania totaling 9 megawatts, developed by Dimension Energy and facilitated by Black Bear Energy. The REIT now hosts 49.5 megawatts of onsite solar across 29 properties in 10 states, alongside community solar portfolios in New Jersey and Maryland.
The structure is the transferable part. STAG did not build an internal energy development team. It engaged Black Bear Energy as owner's representative to manage developer selection, contract negotiation and execution across a distributed portfolio. That intermediary model resolves the practical obstacle facing most industrial owners, which is that rooftop solar economics are site-specific while owner expertise is centralized and thin.
Twenty-nine properties across ten states also means STAG is negotiating across many utility territories, interconnection regimes and net metering rules simultaneously. Doing that repeatedly builds an institutional capability that a first-time owner does not have, which is precisely the argument for a representative who has run the process before.
Prologis Builds Around a Ten-Year Wait
The harder case is Almere, in the Netherlands, where Prologis developed a 23,000 square meter logistics building at a location where utility power was capped at 55 kilowatts until at least 2035. Rather than wait a decade, the company built a microgrid within a year that raised available power roughly sevenfold to about 400 kilowatts, combining rooftop solar, battery storage, backup generation and an energy management system. Solar covers roughly half of annual energy use, and three levels of redundancy deliver a stated 99.9 percent reliability.
Prologis built the system on a modular platform it calls OnDemand Power and has said the approach is already informing projects beyond the Netherlands. A United States application is already operating: a Prologis truck charging facility in Southern California pairs charging with a renewable microgrid and storage, designed for up to 96 electric trucks simultaneously.
The 2035 date is what makes this instructive rather than aspirational. Faced with a decade of waiting, the landlord treated onsite generation as the entitlement rather than as an upgrade, and delivered a leasable building on an ordinary development schedule. The alternative was a parcel producing nothing until 2035.
Why the Constraint Moved From Land to Power
The development math has shifted underneath the sector. New industrial deliveries in 2026 are running more than 70 percent below the pandemic peak and construction starts are down roughly 25 percent against the 2017 to 2019 average, with larger users waiting one to two years for sufficient power access and standard utility upgrades taking up to 12 months, according to PwC and Urban Land Institute figures. Interest rates explain part of the gap. Electrical capacity explains a growing share of the rest.
Power now functions as a threshold constraint rather than a line item. A site can clear every traditional screen, land price, labor access, highway proximity and zoning, and still be undevelopable on the required schedule because a substation upgrade takes years and the developer controls none of it. That is a different category of risk than cost inflation, and it is not solved by paying more.
What to Do
1. Move the electrical capacity question to the front of site screening, alongside zoning and access. Ask for confirmed service capacity, current utilization and documented headroom before the land bid, not after.
2. Price the delta between confirmed service and required service as a schedule risk, not only a construction cost. A 12 to 24 month utility timeline changes rent commencement, carrying cost and refinancing assumptions.
3. Evaluate onsite generation against the utility timeline, not only against the utility rate. Where a service upgrade runs years, a microgrid is a schedule solution whose value is measured in rent commenced earlier.
4. If your portfolio lacks internal energy expertise, engage an owner's representative rather than negotiating directly with developers site by site. The STAG structure exists because the alternative does not scale.
5. Document power capacity in leasing materials the way you document clear height and dock doors. Tenants are now selecting on it, and unstated capacity is unpriced capacity.
The Bottom Line
For most of the modern industrial cycle, electricity was an assumption. It is now a specification, and tenants are paying premiums for it while passing on cheaper space that lacks it. The landlords who treat generation as part of the building rather than as a service delivered to the building are the ones converting that shift into rent.
Sources
https://www.jll.com/en-us/insights/market-dynamics/industrial-market-statistics-trends
https://www.jll.com/en-us/insights/where-energy-meets-property
https://www.jll.com/en-us/newsroom/power-availability-becoming-key-driver-of-cre-value
Frequently Asked Questions
What did JLL find about industrial tenant priorities?
In second quarter 2026 data, JLL reported flight-to-quality intensifying as tenants prioritized power availability, automation-ready specifications and skilled labor access over discounted rents in older facilities. Leasing rose 49.4 percent year over year and vacancy compressed to 6.8 percent.
How much of a rent premium does power access command?
JLL found high-power leases in Silicon Valley transacting at rents averaging 49 percent above other leases signed over the past three years, and 33 percent above rents achieved by buildings delivered within the past three years.
What is the Black Bear Energy structure?
Black Bear Energy acted as owner's representative for STAG Industrial, managing developer selection, contracting and execution across a distributed portfolio. The model lets an owner without internal energy staff run a repeatable process across many utility territories.
Why did Prologis build a microgrid instead of waiting?
Utility service at the Almere site was capped at 55 kilowatts until at least 2035, far below what the building required. The microgrid raised available power roughly sevenfold within a year, allowing the building to be delivered and leased on a normal schedule.
How should an owner evaluate onsite generation?
Against the utility timeline as well as the utility rate. Where a service upgrade takes years, the value of onsite generation is measured substantially in rent commenced earlier rather than in cents per kilowatt-hour avoided.
