Industrial real estate can be defined as land or structures that are suited mainly for industrial activities. Some of these activities include warehousing, temporary storage, distribution, production and manufacturing. While industrial space sounds simple, it actually comes in a wide variety of shapes, sizes and business applications.
Industrial properties can generally be broken into three sizes: small, large and extra-large. This all depends on the owner or the tenant’s needs.
Small industrial sites include single or double-story buildings zoned for industrial use. These often have flexible interior spaces that can be used for a different purposes. Flexible space is used by small businesses such as mechanics, research laboratories and start-ups.
Some industrial properties use medium to large distribution centers or plants. These are intended to make or store merchandise.
On the extreme end of the scale are the \”large box\” mechanical spaces. These gigantic modern spaces are utilized as logistics and circulation centers. They often hold, and eventually distribute, completed products to stores. They can also send products directly to the end-user. As an example, someone can purchase products through Amazon and have them shipped to their house. Amazon is an excellent example of a large box industrial space.
Some benefits come with investing in industrial real estate. Industrial space tends to bring in excellent yields for investors, due to the high rent rates. Most industrial property is valued by the square meter and can offer up to an eight percent yield.
Industrial real estate tenants usually agree upon a long lease of up to 10 years. This is great for investors because it provides them with more security.
Most industrial leases are net leases. The tenants cover some or all the expenses associated with the property. This can also include the cost of maintenance. Because of this, maintaining an industrial real estate property can be much easier than that of a different type of investment.
One of the major disadvantages of investing in industrial space is the up-front investment cost. Industrial space isn't typically easy for a small investor to get started with. However, it is possible to invest in these properties after saving for them or getting a large loan. A commercial real estate broker can help answer any related questions you may have, on how to invest in this type of space. Industrial real estate is a profitable investment and will generate a high level of income in the long run.