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Why you should add industrial space to your portfolio
Industrial is more than just a design trend right now.
As e-commerce continues to boom as a result of the pandemic, an unlikely leader is emerging when it comes to commercial real estate.
Industrial space.
While it may not be glossy or glamorous, industrial space is in high demand right now as major retailers shift operations and look for fulfillment centers across the country. From 2014-2019, rents for warehouse spaces rose more than 33% nationwide, outpacing other asset classes by far.
Why?
There are several factors. Many major retailers calculate their need for warehouse space based on shipping and transport times and any shift in those timelines can create havoc. The disruption of supply chains this last year left many businesses scrambling for additional storage space to warehouse items that came in ahead of schedule or those that were severely delayed.
Additionally, consumers are shopping online now more than ever before, creating the need for multiple fulfillment centers in areas across the country in an attempt to compete with shipping times and costs from their competitors.
And with building costs skyrocketing over the last year, retrofitting an existing industrial space is far more cost effective than building new.
According to nreionline.com
the U.S. industrial market is also drawing attention from foreign investors. Buyers from around the world are looking for industrial products to purchase and consider them a relatively safe investment right now when compared to the retail sector or office space which have been slow to recover.
What are the advantages of investing in industrial properties?
Multiple opportunities to increase value
- Many industrial warehouses were built decades ago and could benefit greatly from upgrades. A new exterior façade, a fresh coat of paint inside, polished concrete floors and the addition of dock doors or office space could increase interest and value for a minimal cost.
- Larger warehouses can often be converted into multi-tenant spaces relatively quickly, creating additional income and growth opportunities.
Low leasing expenses
- Owners may have to clean out spaces or stabilize the shell in between tenants, but the build-out or modifications to spaces are typically tenants’ responsibility.
- Industrial space appeals to a variety of businesses from retailers to medical facilities, government agencies, and multi-branch corporations to name a few.
Disposition Options
- When the time comes, industrial space can be sold as a whole, or subdivided and converted into a multi-tenant structure and sold as individual units.
If you haven’t considered adding industrial property to your portfolio, perhaps you should. We offer a variety of services to help you decide. From fee-based consulting services, acquisition, and commercial property management-we can present all options and guide you through the process from start to finish.
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