What Is Industrial Real Estate: Everything You Need to Know
Industrial real estate can sometimes be confusing and make you do a double take. Chances are, it’s not something people think about often, but industrial buildings are an essential part of the real estate market, and they deserve some love!
If you’re new to property investment and are curious to know what industrial real estate is all about, then read on. We’ve got the essential information you need to know. You don’t have to be an expert to understand this sector, but you will be by the time you’re done reading this article.
What Is Industrial Real Estate?
Industrial real estate pertains to industrial buildings or facilities used to manufacture, store, and distribute materials. These properties are usually located in areas with easy access to transportation routes and resources, like water, power, and labor. They’re usually leased out to companies producing primary consumer goods, such as food items, construction equipment and supplies, automobiles, electronics, and more.
Among all the real estate classes, industrial real estate is regarded as the most versatile, as it can accommodate a wide array of operations and activities.
Difference Between Industrial and Commercial Real Estate
New investors might sometimes confuse industrial real estate with commercial real estate. It is important to note that the former focuses on industrial buildings, while the latter are mostly assets occupied by businesses that use them to generate income from selling products or providing some type of service. These include shopping centers, retail stores, and office buildings.
Additionally, industrial properties are usually bigger than commercial properties due to their industrial purposes. You might find industrial buildings with hundreds of thousands or even millions of square feet in size.
Regarding lease terms, industrial real estate is typically leased for longer periods compared to commercial properties. Industrial tenants are usually large companies that need a space or facility that they can use over extended periods, while commercial tenants often require a shorter-term lease because of the business operations they are dealing with.
Industrial Real Estate Examples
To understand this market better, here are the best examples of industrial real estate.
1. Manufacturing Facilities
These industrial buildings are used by companies to manufacture and assemble products. Some of the most common examples include automobile manufacturing factories, semiconductor plants, and pharmaceutical laboratories, among others.
2. Storage and Distribution Centers
These are basically warehouses used by large companies to store and distribute their products. They are usually strategically located near transportation routes, so the products can be easily forwarded to their destinations.
3. Flex Spaces
These are industrial buildings with portions converted into office spaces to provide tenants with all of the necessary industrial and office infrastructure in one place. Some good examples of these properties are car dealerships, data centers, and research bases.
4. Showroom Buildings
Some companies, such as furniture makers and pre-fabricated home builders, would also need facilities with open spaces to exhibit, showcase, and demonstrate their products to potential customers. This is where showroom buildings come in.
5. Industrial Parks
These industrial properties are leased out to multiple industrial companies or businesses. You might find industrial parks with a mix of manufacturing facilities, warehouses, and other industrial buildings. The most common types of industrial parks include technology parks and industrial estates.
Start Your Investment Now!
Industrial real estate is a great way to diversify your portfolio and potentially generate higher returns. But before you invest, it is essential that you understand its basics and ensure you are making the most in every decision you make.
Therefore, you should have a real estate negotiation expert by your side. Levi Smith from PA Commercial, LLC is a highly experienced broker who has helped investors save millions of dollars in industrial and commercial real estate transactions. Contact Levi Smith today and start building your real estate portfolio on the right foot!