Industrial real estate rarely has the wild swings of the residential market, reducing the downsides that go with a retraction in the economy. Industrial properties come in a wide variety of sizes and configurations. Furthermore, with industrial properties there is typically little to no landscaping issues or other headaches found with other types of commercial real estate. Industrial is typically more stable overall in the long term due to the overall length in leases. Industrial leases are typically signed in the 3-5 year lease range, with 10 year leases not out of the question. When you compare the leases of industrial real estate to other types of commercial real estate such as office, hotel and multi-family, there is less turnover which equates to a decrease in potential lost revenue.
According to Emerging Trends in Real Estate® 2014, co-published by PwC US and the Urban Land Institute (ULI), “the U.S. real estate recovery is set to continue into 2014, with investors increasingly looking beyond some of the traditionally popular markets to secondary markets in search of higher yields.” According to Robert Krueger of the ULI: “In terms of market sector prospects, industrial tops the ranking in this year’s report, with warehousing standing out as a particularly strong subsector. Warehousing was a clear favorite among survey respondents, with 64 percent making a “buy” recommendation for the subsector and less than 10 percent advising selling. With retailers and manufacturers continuing to shorten their supply chains, the ongoing growth in e-commerce, especially in same or next-day delivery, is fueling the requirement for vast fulfillment centers close to major cities. Research and development industrial, self-storage and data centers are also expected to show further improvement.” (November 7, 2013 by Robert Krueger, Urban Land Institute)
Current available industrial buildings are being turned into restaurants, clubs, and other establishments, creating a shrinking inventory of available industrial buildings for traditional use. Also, as former industrial areas are being rezoned, there is less room for suppliers and distributors to access and store their inventories. This means that the industrial property should only become more valuable in these areas as businesses long to be closer to the cities they supply. You’ll want to be sure that all of your selected industrial properties should have features that are appealing and practical to most potential buyers. USA Investments can help guide you in choosing the right industrial property for your portfolio.