Six Top Pieces Of Advice For Industrial Real Estate Investors

When it comes to commercial real estate, there are five common types of properties. There are retail spaces, which are designed for selling goods directly to customers. Office buildings are for one or more businesses that provide services, and commercial land may be used for farming or other purposes. There are multi-family complexes, which are rental properties for people to live in. Lastly, industrial buildings are used for manufacturing and warehousing. There are several benefits of industrial buildings as investments.

Competitive Prices and Greater Availability

Many people aim for apartment buildings or retail spaces. This limits the availability of such properties, and investors may wind up with empty units, buildings with expensive problems or other issues that reduce profits. With industrial real estate, there is often a wider availability of favorable properties. Also, properties are often priced lower in terms of their potential long-term value. When there are vacancies, owners of industrial spaces have lower upkeep expenses than owners of retail, multi-family dwelling and office buildings.

Solid Market Liquidity

With a solid market, an investor can quickly sell a property without changing its price dramatically. Industrial real estate produces strong liquidity, which is a big reason why many seasoned investors choose this type of commercial investing. When an industrial property is in a favorable urban location, it is especially attractive to investors. If the need to sell arises, it should not be a major financial loss.

Michael Zimmerman’s Prentice Capital is having a strong year

business manPrentice Capital was up 15.3% net last month, bringing its year-to-date gain to 49.4% net. Prentice touted its ability to preserve capital during market downturns like the first quarter of this year and the fourth quarter of 2018. Q3 2020 hedge fund letters, conferences and more Background of Prentice Capital The fund utilizes a low Read More


Strong Income Returns for industrial real estate?

Industrial real estate investors enjoy strong income returns from continuous production. The good news is that strong production trends are predicted to continue whether people shop more online or in stores. When they shop online, the demand from e-commerce providers increases. If customers shop more in brick-and-mortar stores, the demand from those merchants increases. Either way, it is a win for investors.

Lower Maintenance Costs

Offices, retail spaces and apartment complexes have more fixtures and features that are subject to strict codes and regulations. Commercial land also has risks and regulations. However, the requirements are not as extensive for industrial buildings. For investors who are not passive and wish to buy a property, these are some additional benefits of industrial buildings:

  • If the building is made from steel, insurance rates may be lower.
  • The potential energy savings are high with good insulation.
  • Industrial buildings tend to maintain their value better over a long-term period.
  • The need for remodeling is not as high, and foundations of industrial buildings tend to have fewer problems.
  • When constructing a new industrial building, the costs for land and supplies tend to be lower than they are for other types of commercial real estate.

Industrial Real Estate Has An Easier Leasing Process

Because of the way office, retail and apartment buildings are designed, there is more work to be done when a tenant moves out and a property must be prepared for the next one. Most production businesses that lease industrial spaces take everything with them. Aside from a few fixtures, the building is usually empty. Many industrial buildings have concrete floors, steel construction and other durable building materials. This means that repairs and maintenance tasks are minimal. If the building is in an ideal location, this can reduce the amount of time between tenants.

Smart Investment Shopping

To be a good investor, it helps to learn from seasoned investors. There are plenty of good sources for guidance. These are a few helpful pieces of advice to follow:

  • Keep up with the trends and changes in industrial real estate.
  • Take into account the brick-and-mortar retail, e-commerce and shipping businesses that affect industrial properties.
  • Invest in ideal properties before interest rates rise.

When looking at potential industrial real estate investments, there are several important considerations. Consider the age, condition, construction materials and existing security features of the property. Security is especially important in cities or areas with higher crime rates. The age, condition and construction materials can help determine if and when renovations may need to be planned. Check to see if the parking lot or distribution docks need to be repaired soon. Measuring is also critical, and this is especially important if the space will be divided for multiple tenants.

Researchers predicted that demand for industrial real estate would grow by 850 million square feet by 2023. Also, experts predicted that e-commerce sales would see double-digit growth. There are also some predictions about the future of e-commerce.For the next several years, this is good news for many industrial real estate investors. It is clear that the benefits of industrial buildings as investments can yield stability and fewer risks for investors.

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q3 2019 hedge fund letters, conferences and more