When considering commercial investment opportunities, people may not initially think about industrial buildings, as retail locations, office space, and multifamily housing are more commonly recognized investments. Yet industrial buildings are actually great investment opportunities, for a variety of reasons. Anyone considering commercial real estate investments should look into the potential that exists with industrial buildings, as there are numerous opportunities available.
Industrial space is a necessity, yet is shrinking in some areas. Land is being used for other types of development, and industrial buildings are being repurposed. Since there is always a need for these types of buildings that offer a lower construction cost, returns are recognized after a shorter period of time. They may not appear as lucrative as other investments; however, with earlier returns and a higher percentage of return, industrial property can be rewarding. Although these properties may not appreciate as quickly as more popular types of buildings, they are more stable because of actual land value and lower building costs.
Long Term Lease Stability
Industrial space simply does not turn over as quickly or as often as other types of commercial real estate investments. Where office leases tend to renew yearly, often bringing changes with them, industrial leases are usually in the 3 to 5 year range and sometimes more. Typically, tenants leasing industrial space don't want to move once they settle in, unless something about the business or the location changes. This means less chance of space sitting empty.
Real estate that is zoned for industrial use offers more flexibility about how the land is used than most other land parcels. Industrial typically means warehouse and factory or production spaces; however, it can also mean combination spaces that include offices, food production plants, and many other different kinds of multi-use facilities. Other than urban retail locations with living spaces above, this kind of property usage flexibility is nearly impossible anywhere else.
Easier to Manage
Overall, industrial properties are much easier to manage than retail, corporate, or housing properties. They are larger spaces typically occupied by only one tenant, and there is simply much less to maintain. With uncomplicated buildings and fewer tenants, building use from employees and customers is actually much lower, making the cost to maintain them much lower as well.
Simply speaking, industrial buildings and properties are a completely different end of the spectrum in commercial real estate investments in comparison to other types and deserve consideration. For the investor looking for commercial investment opportunities that require less capital initially and less management in general, industrial properties could be a good option. Returns may be appear lower in figures; however, they are higher in percentage and are usually realized much sooner. Combined with the other positives noted, investing in industrial space could be a perfect choice. To learn more, discuss local demand and commercial investment options with a knowledgeable commercial real estate broker who is experienced in industrial properties!
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