With the rise of start-ups, tech companies, and e-commerce, the focus on commercial industrial properties is stronger than ever before. There are numerous investment opportunities available in the industrial real estate sector, and many of these properties can go overlooked by potential investors in place of more common retail or office investments. Commercial industrial properties span a variety of business types and sizes which means there are almost always new business opportunities to consider.
What is an Industrial Investment?
Commercial real estate is a type of investment property intended specifically for businesses, and there are five major categories of commercial properties:
- Office
- Retail
- Land
- Multifamily (apartments)
- Industrial
Many of these categories can prove fruitful depending on the local economy. The industrial sector often remains expansive and generally reliable in terms of performance. Here are a few primary types of industrial real estate:
- Manufacturing
- Warehouse/Distribution
- Telecom or data hosting centers
- Flex Spaces
- Cold Storage
- Showrooms
Benefits of Going Industrial
Over the last few years the demand for warehouses, distribution centers, and storage spaces have grown significantly making these some of the smartest commercial industrial investments for today’s market. Locations like these also tend to be highly versatile and can accommodate unique start-ups or tech companies looking for a dynamic space.
When you look at the potential cash flow, industrial properties often lean towards higher rents and longer leases which can mean a higher annual return. Especially with larger, established businesses, leases could last for years at a time. Many of these open facilities also prove to be relatively low maintenance compared to busy office or leisure properties.
Potential Risks of the Industrial Sector
Although most businesses will sign longer leases for industrial properties, the market may fluctuate with little notice and abruptly leave you with an empty warehouse. Like with most commercial properties, finding a new tenant for your space can be unpredictable and leave you with long periods of vacancy.
Another problematic aspect of the industrial investments is the rapidly evolving technology and practices of companies. If your building can no longer handle current machines or processes, you will likely struggle to find reliable tenants. Securing a location with flexibility and accessibility is a key component to owning a healthy commercial property.
With any investment, you will need to make a full assessment of the property including its location, size, and type, but you do not have to do it alone. If you are seeking a reliable and knowledgeable agency that will focus on your individual commercial real estate needs, contact Royal Commercial Real Estate LLC today.
