Should I Invest In Industrial Warehousing?
May 30, 2023
When it comes to commercial real estate investment, we have noticed the industrial warehouse market as a prominent player. As e-commerce continues to grow, more and more companies are now looking for smaller warehouse spaces for their business operations and these include distribution spaces, small businesses and manufacturing units.
E-commerce is here to stay which means there will be consistent growth in the demand for industrial warehousing over the years.
In this article, we dive into the highlights of the industrial warehousing space and answer the question “Should I Invest In Industrial Warehousing?”
Why Industrial Warehousing?
Through industrial real estate, you enjoy a practical and efficient space which can be used to build out and serve any purpose. No matter the sector or industry you operate in, an industrial space can be transformed for your optimal use
Such properties are priced about 50% lower than the market peak and make for a great investment. Even the monetisation cycle from the time of construction to the rental earnings is faster which will give you a steady income and long-term security.
Let us take a look at the different ways you can benefit from investing in industrial warehousing.
As an investor, you are always looking for an increase in the return on investment (ROI) and when compared to all the other types of commercial real estate investments like retail or office, warehouse real estate investment enjoys a higher ROI. After the pandemic, the e-commerce industry has picked pace and this has led to a rise in the ROI. While you shouldn’t invest in a property due to a specific company, you should focus on trends and the e-commerce industry is showing high growth potential.
Longer Lease Terms
Most industrial warehouse tenants prefer a longer lease since moving from one location to another is expensive, tedious and very complicated. Even if they have a single operation at the warehouse, they wouldn’t be willing to move time and again. This is why many warehouse renters like to stay in one place for the long-term and this means a longer lease for you. If you are investing in commercial real estate to enjoy passive income, an industrial warehouse will ensure long lease terms and consistent income for a long time to come.
As compared to any other commercial real estate space, investing in industrial warehouses will require minimal maintenance. Even if you are constructing a property, it will not involve a lot of cost and time. The period from the construction of the property to its rental is shorter as compared to other properties. It also means you will have to spend very little on the annual maintenance costs. Industrial properties can be a hands-off investment which is why it appeals to many investors.
So the question is, “Should I Invest in Industrial Warehouses?”. As a long-term investor, you can build wealth through commercial real estate and industrial warehouses offer an ideal opportunity.
However, the key is to diversify your portfolio with different types of investments and remain patient. With real estate, the risk is low and if you stay patient, the rewards can be satisfying.