Should Industrial Properties be a Part of Your Commercial Real Estate Investment Portfolio?
Industrial properties have long been a staple of commercial real estate investment portfolios, and for good reason. These properties, which are used for manufacturing, distribution, and storage, offer a variety of benefits to investors.
One of the biggest advantages of investing in industrial properties is their potential for cash flow. These properties often have long-term leases, providing a steady stream of rental income for the investor. Additionally, industrial properties can appreciate in value over time, especially if the property is in a growing market or is redeveloped for a different use.
Another benefit of industrial properties is their tax benefits, such as depreciation and the ability to write off certain expenses. They are also a good way to diversify a real estate portfolio and reduce risk. Long-term tenants that are less likely to move than those in other types of properties also provide more stability to the investor.
When it comes to industrial property investment, location is key. Industrial properties tend to be in industrial areas, far from city centers, but near airports, ports and highways. It's important to conduct thorough research and due diligence on the property, the market, and the tenant before investing in an industrial property. And it's also important to consider the environmental regulations and zoning laws in the area, as these can affect the property's value and potential uses.
There are several different types of industrial properties that are considered strong investments, each with its own unique set of advantages and disadvantages.
Warehouses: Warehouses are used for storage and distribution of goods and are often leased to logistics and e-commerce companies. They are in high demand due to the growth of e-commerce.
Flex industrial properties: Flex industrial properties are a combination of warehouse and office space. These properties are designed to accommodate a variety of uses, such as manufacturing, distribution, and office space, and can be leased to a variety of tenants.
Manufacturing facilities: Manufacturing facilities are used for the production of goods and are often leased to companies in the manufacturing or assembly industries. They can be a good investment due to their long-term leases and potential for redevelopment.
Distribution centers: Distribution centers are used for the storage and distribution of goods and are often leased to logistics and e-commerce companies. They are in high demand due to the growth of e-commerce.
R&D facilities: R&D facilities are used for research and development and are often leased to companies in the technology and biotech industries. They can be a good investment due to their high-tech nature and potential for redevelopment.
Cold storage facilities: Cold storage facilities are used for the storage of perishable goods such as food, pharmaceuticals and flowers. They are in high demand due to the growth of e-commerce.
Industrial properties should be a part of any commercial real estate investment portfolio due to their potential for cash flow, appreciation, tax benefits, and diversification. As always, it's important to conduct thorough research and due diligence before making any investment decisions, including considering the location, the market and the tenant. And also to consider different types of industrial properties and which would be the best fit for your portfolio.