Know Your CRE: Industrial Real Estate Types

  • April 7, 2017
  • Industrial
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Industrial real estate is a broad commercial real estate category that encompasses many different types of properties. It also happens to be one of the most steady performers in commercial real estate investing, providing an annual total return over the past 20 years of 10.6%*. So, it’s important to have a firm understanding of the different property types that fall under the industrial real estate umbrella.

When most people think of industrial they think of warehouses, but this sector offers so much more than that. In fact, according to CoStar, there are actually eight industrial real estate property types.

Out of these eight, there are three main industrial real estate categories. Below we break them down and provide more color to this popular, and well-performing, commercial real estate sector.

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Industrial Real Estate Primary Categories

While there are eight property types in industrial real estate, there are three primary categories that provide the bulk of what you will find on market. These are Warehouse/Distribution, Manufacturing and Flex/R&D properties.

Warehouse/Distribution

industrial real estateA warehouse or distribution building is industrial real estate that is primarily utilized to store and/or distribute business inventory (goods, merchandise and materials).

These industrial properties are typically very large (50,000 square feet to 200,000+ square feet), single-story and require high ceilings (60-foot+) in order to house intricate racking and storage systems. They feature numerous loading docks, truck doors, and large parking lots to accommodate trucks and semi-trailers.

You will not find a lot of office space at this property type, typically less than 15% of the total square footage.

Manufacturing

Manufacturing facilities, also known as heavy industrial buildings, are industrial real estate that is used to convert, fabricate or assemble raw or partially raw materials into goods/products. These properties are specifically designed to house and maintain the specialized equipment used in production.

Due to the size and function of this equipment you will see the following property features at manufacturing facilities: high capacity eclectic power, heavy ductwork, high capacity ventilation and exhaust, floor drains and more.

You will not find a lot of office space at this property type, typically less than 20% of the total square footage.

Flex / R&D

industrial real estateFlex properties are industrial real estate buildings that are just as they sound, “flexible”, covering a wide range of uses and designed to fit the multiple needs of an end user. Often times there will be multiples uses under one flex property roof, which can include retail showrooms, office space, warehouse and distribution, and research and development (R&D).

Flex properties are pretty much synonymous with R&D. Why? Because they offer hybrid space, which appeals and caters to R&D high-tech industries (computers, biotech, electronics). In one location they can house office space, storage and manufacturing…all while offering a campus-like setting in business parks.

Since flex buildings are designed for multiples uses, they contain the most office space you will find in any of the industrial real estate property types, from 30% up to 100% of the total square footage.

Seeking Industrial Real Estate in or around Baton Rouge?

Now that you know the main types of industrial real estate, it’s time to go out and locate the perfect asset to suit your business needs. Whether adding to your portfolio, disposing, or leasing, this is a commercial real estate sector that produces stable return on investment. Our industrial Advisors have years of market experience in and around Baton Rouge. They are on hand to help in any stage of the process, from locating to negotiation. Contact us today to see how we can assist in your industrial real estate needs.

*According to the National Council of Real Estate Investment Fiduciaries (NCREIF) Index.

Source
CrowdStreet

Bio-Blue

SVNGLLAbout Us – The team at SVN | Graham, Langlois & Legendre has over 99-years of combined experience helping clients across the Baton Rouge market get the most value out of their CRE investment. Contact one of our dedicated CRE professionals today with any questions you may have and start seeing the returns in a market that will make sure to give today, tomorrow and for the extended future. To reach us, you can call us at 225.367.1515 or you can send us a message on our website. You can also follow us on Twitter at @svngll or on Facebook.

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