When commercial real estate investors want to acquire a new property, they often go to what they know. Their portfolios may consist of many similar types of properties. But it doesn’t have to be that way! Diversifying a real estate portfolio can be one way to ensure sustainable, steady growth over the long term. Commercial real estate investors may shy away from industrial properties for sale if they have never considered one before, but there is great growth in the industry and there can be strong returns to investors who do it right.
Industrial warehouses, in particular, are often a great investment to enter the industrial property sphere. They have many uses, many tenant types, and many looks. This gives commercial real estate investors the opportunity to find a property (and tenant) that can grow with them and bring in a return on that investment. In order to find an industrial warehouse for sale, investors and brokers need to understand the uses of these spaces and how to identify industrial properties for sale that will fit those needs.
Types of industrial warehouses:
- Industrial warehouse: This type of warehouse is primarily used for manufacturing, fabrication, production, assembly, etc. for industrial businesses.
- Commercial warehouse: This type of warehouse is often used for inventory storage.
- Distribution center: These tend to handle the selling as well as the shipping for businesses, and may even share the space with the business’s inventory storage (commercial warehouse). Typically, they handle orders and products for multiple businesses.
- Fulfillment center: These are also called third party logistics providers, and handle the shipping (and finishing, if needed) of products for multiple businesses.
Why Invest in Industrial Warehouses
If you are interested in adding industrial properties for sale to your investment portfolio, there are 5 great reasons you should consider them:
Fewer responsibilities: Industrial warehouses often are rented out by companies in the more blue collar realm, and they often manage the property themselves. They tend not to call for things like light bulbs or minor plumbing issues, and they just get it fixed themselves. These types of commercial real estate properties are also often great candidates for NNN leases, which pass on responsibilities like maintenance, property taxes and insurance premiums to the tenant, further freeing you up from those landlord tasks that take up time.
Long term stability: Because these are a great option for triple net leases, the longer term means you will have a more consistent income stream from the commercial real estate property over many years to come. Industrial properties tend to have a lesser turnover than commercial properties, anyways, so an industrial warehouse can bring a lot of value to you over the next decade or longer.
Stable return: Industrial properties for sale, like warehouses, are a more stable form of investment, bringing in a steady return for you as an investor.
Flexibility for tenant type: There are many types of commercial real estate candidate businesses that need an industrial warehouse, so you won’t be tied to a small field of tenants. Each tenant might have their own requirements in terms of space, offices, height, or loading/unloading areas. That means that no matter your specific property specifications, there will be a tenant out there who can use the space for their needs.
Increased need: The need for industrial properties is continuing to increase, and this means that it is getting competitive! If you have a commercial real estate property to offer businesses, then you can bring in a higher monthly rent as they need what you can offer.
How to Find an Industrial Warehouse for Sale
Now that you understand the benefits of investing in industrial warehouse space, you should learn how you can go about finding a warehouse for sale. There are warehouses across the country, in large cities and small towns. Industrial warehouses are used for many different uses, by many companies that may have just one location or several across the country. These tips will help you find an industrial warehouse that fits your investment portfolio needs and can attract tenants no matter where the warehouse is located.
Identify your needs: Industrial warehouse property types come in many shapes, sizes and locations. As you begin to look into investing in one (whether on your own or with a broker for support), you should identify your needs and goals with the property. Figure out the square footage you are looking for, the type of tenant you may want to work with, and any special needs they may have (like technology). Depending on where you look, there may not be updated facilities available. However, if you are interested in more updated properties that can handle AI, robotics or other technology advancements in the space in recent years, you may be able to make those upgrades or lease to a tenant who is willing to do so themselves. Also determining the need for an office space or multiple offices will help narrow your search to the commercial real estate property type that meet your criteria.
Figure out ideal location: No matter what type of warehouse you are buying, it will need to have access to transportation and space for loading and unloading of materials. For industrial warehouses, the amount of space for a loading dock can vary greatly based on what the warehouse is being used for. With manufacturing or production, it could be large or small, depending on what the company makes. For nearly all business, though, having access to airports, interstates, highways, and even seaports can be critical for their business operations. These properties can be found across the country, so if you have a specific state or town you’re interested in — or simply know that you want to invest in the South or large cities — that can help you with your next step.
Narrow your search: After you have identified your needs and figured out the location you want to buy in, you can narrow down search results with your brokerage team. Refining the search by building square footage, tenant type/status, location, price, or other factors can bring in a list of properties that will suit your investing goals. By having a narrowed search, your brokerage team can also keep an eye out for new to market properties or properties that will be coming soon that fit your needs, so you can be one of the first eyes on a new listing.
Key elements to keep in mind: As you sift through the commercial real estate listings you or your broker find, you should keep a few key elements in mind to further narrow your search to the property you want to buy:
- Proximity to transportation
- Space, both square footage and height (depending on ideal tenant type and building type)
- Loading dock and space
- Technology and/or facility capabilities
- Office space within building
If you’re ready to take the next step and talk to a broker about investing in industrial real estate, specifically in the warehouse space, Sands Investment Group can help! We have a team that specializes in Industrial Real Estate. Our commercial real estate team works with build-to-suit developers, private investors, private equity firms and REITs to assist with acquisitions and dispositions of industrial properties for sale.
Call 844.4.SIG.NNN or contact us here today to learn more about how the Sands Investment Group team can help grow your portfolio with industrial warehouses.