Considered one of the strongest and most appealing asset classes because of its lack of complications and expenses in purchase and ownership, operation, and provision of a more stable cash flow, when compared to other real estate sectors such as office and retail, industrial real estate investment properties is a form of commercial real estate investment that deals with warehouses, factories, manufacturers, depots, storage, industrial businesses, showrooms, logistics and distributions, labs, and even telecom buildings.
As with any form of investment, it is essential to conduct careful research on each individual property thoroughly and be fully aware of the risks associated with the purchase. There are several benefits to owning industrial property; hence, it can be a significant financial burden if not investigated properly beforehand.
Here are quite a few essentials to keep in mind when considering an industrial real estate investment:
- Market functioning: The presence of vacancy is one of the greatest risks to real estate investors, making it vital to research markets with low vacancy rates and strong underlying demands for space. The net absorption is the net change in occupied space—taking into consideration vacated space and new space supplied to the market. Therefore, positive net absorption is a key driver of rental growth in real estate markets that highlights a lack of alternative availability. Hence, it is best to own industrial space in an area where there is high demand but limited inventory to ensure continued upward pressure on rents.
- Location: The location is critical when determining the purchase of any property, let alone one that requires such a large investment as this one. It is crucial to know the area you choose has convenient access to major arterial roads and transport links. This means that trucks and large vehicles do not need to navigate through intricate CBDs (define this acronym) and small streets, making access to a clear path to the nearest highway a priority so they can get their long haul underway and keep transportation and freight costs low.
- Investment criteria and future-proof: There is a range of options an you must make your investment intentions very clear to agents, vendors, and, most importantly, yourself. This facilitates a smooth investment process, as all the parties involved will be fully aware of the end goals. At the start of the process, the following questions must be asked and answered: what are your industrial investment ambitions? Do you want to find a long-term residential tenant? Do you want to upgrade and sell the property?
- Property condition: With the newest industrial properties, problems arise at one point or another prior to purchasing an industrial space, after which careful review of all any work needed on the asset is completed. Additionally, determine if recouping those expenses through the rental payments are required, or associated capital raise is needed resulting from improvements to the building. Finally, review the previous owner’s completed work on the property and assess if anything will need to be redone or if key items such as the roof are nearing the end of their operational life cycle. This ensures sufficient capital is kept in reserve to address major projects or repairs during the lifetime of the investment.
At Wealthbci, we believe in and value keeping long-term relationships with all our clients, especially when it comes to high-value investments with the potential for consistent, steady returns. This means that our team analyzes several properties keeping in mind our clients’ preferences and portfolios to find assets that will seek to enhance their investment portfolio while ensuring sufficient returns. So contact us now to book an appointment!!