What is Industrial Real Estate?
There are multiple types of real estate. We have commercial real estate, which is property used for business purposes, such as office buildings, gas stations, restaurants, office parks, convenience stores, malls as well as industrial real estate. I consider industrial real estate to be a sub-category of commercial real estate. Another type of real estate is residential, which encompasses living purposes, such as residential subdivision or a single family home. The sub-category of industrial real estate is primarily used for manufacturing, producing, assembling, and distributing goods and is performed either in a warehouse, plant or factory. Industrial real estate can typically be found in any industrial setting. These types of locations will frequently have a commerce park with garages, distribution centers or warehouses. Residential uses are not allowed within the industrial real estate sector. Industrial is the primary manufacturing force that produces merchandise for malls, shops and retail stores. With commercial real estate, and the sub-category of industrial real estate, it is mostly found that an investor owns the building and land and usually leases the space and collects rent from a tenant with whatever type business they operate there.
Common Tenant Needs in Industrial Real Estate
Whether you need a new office location or warehouse space, as a tenant, you need room to downsize, expand, or start a new business. As a tenant with these types of needs, it a necessary to consult a real estate professional that can educate you regarding the available types of leasing options. There are four primary types of leases. The first is a Gross lease. With a Gross lease, tenants will typically pay for rent and the landlord will typically pay for the property taxes, insurance and maintenance. The opposite of a Gross lease is a Net lease. A Single net lease is where the tenant is responsible for paying rent plus property taxes. A Double net lease is where the tenant is responsible for paying rent plus property taxes and insurance. A triple net lease is where the tenant is responsible for paying rent plus property taxes, insurance and common area maintenance (CAM).
Common Investor Needs in Industrial Real Estate
If you are looking for investment options, commercial real estate can offer an assortment of investment possibilities. Whether it’s investing in commercial real estate or a subcategory of commercial real estate, such as the industrial sector, it is important to educate yourself or seek professional counsel before any purchase is made.
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Location is the biggest thing to consider when investing in an industrial real estate property. Ask yourself… does this site/building offer me fast access to the interstate or rail or a main corridor to help lower transportation cost? In order to achieve the greatest profit possible, you have to have the lowest costs possible for production and transportation of the product(s) being sold in retail stores. Another element to consider, for investors, is physical characteristics of the building. I have noticed the industrial user isn’t so much as worried about its physical appearance because they don’t get too much walk in traffic like a retail store. Not to bore you, but dock high loading doors location and ease of use for eighteen wheelers to back up to them for offloading is a very important detail to pay attention to. And after the offload, do you have enough ceiling height to stack and store whatever you need for supplies. These are all general rules to play by when looking for an industrial site or building. There are many aspects to look into when it comes to industrial real estate.
If you found this blog post helpful, or if you have questions or comments about this, I would love to receive feedback from you, in the comments section below. Also, please read my blog post called “Office Tenants and the RISE of Office Space” to learn about the growing need for office space in the USA.
About Christopher Bouchard – Christopher is based out of Pensacola, Florida and has been working in commercial real estate since 2005. His greatest experience and skill set is focused on the sale and leasing of office space, land and industrial properties. Click here to read his full bio, or if you would like to contact him, you can call him at 850-434-7500 or email him at CBouchard@SVN.com.