INDUSTRIAL PROPERTIES

Industrial real estate can be defined as all lands and buildings which accommodate industrial activities ranging from production, manufacturing, assembling, warehousing, research, storage and distribution.

Industrial real estate involves working behind the scenes of all high-traffic spaces and essentially providing the fuel for them to operate. Our clothes, books, cars, bags and every other item around us are all produced and stored in an industrial building. Therefore, the gravity of the influence of industrial businesses is great as it impacts and improves our everyday lives.

Classification of Industrial real estate 

Industrial properties are another broad aspect of commercial real estate because they deal with the whole manufacturing and production of goods in a secluded environment. Therefore, the government has assigned specific areas in each city for industrial activities shown on a zoning map- which describes where the spaces for industrial businesses can be constructed and operated. The zoning map gets even more specific in defining where central industrial activities can and can’t occur so as not to disrupt businesses and residences located around those areas.

• CLASS A INDUSTRIAL: As we already know from the classification of office space, this class of buildings are the newest and best in terms of quality and infrastructure. And because of its varsity in space and amenities like tall ceilings to accommodate modern machines and equipment with good utility systems, they are usually occupied by high-income earning tenants, thereby making these properties go into the market with a low vacancy rate.
• CLASS B INDUSTRIAL: These buildings are slightly older and typically lower in price than CLASS A buildings. However, they require maintenance as investors often view these properties as ‘value-added opportunities’ so they can be converted through renovations and improvement to CLASS A or B+.
• CLASS C INDUSTRIAL: These properties are building usually 20 years old, located in less desirable locations, and need proper renovations and maintenance. These buildings are often low in price with the lowest rental rates in the market.

This type of property can also be converted into a higher-value asset if an investor is willing to put in a lot of time, money, and creativity as this process forces appreciation on the property thereby increasing its value.

TYPES OF INDUSTRIAL REAL ESTATE

1. INDUSTRIAL LAND

It is a land zoned industrially but has no permanent structure on its premises. For the industrial business to operate the land may be used for the following purposes;

• Parking Equipment
• Storing gravel or sand
• Mulching or any other surface operation.

NOTE: It is always important to access where your local market demand lies as it gives investors an option of advertising a build-to-suit type opportunity where the land owner pays the upfront construction cost of the building that meets the tenant’s specific requirement and then leases the space to the tenant upon completion of the project.

2. INDUSTRIAL BUILD TO SUIT

A build-to-suit is an advert to investors who may be looking for space for their businesses. In a build to suit there are either of two options, the land owner pays for the construction of a structure according to the tenant’s specification and then leases that building to the tenants once the building is delivered or the tenants pay for the construction of a structure according to the land owners specification and upon delivery, both agree when leasing the building. In other words, you are having someone pay you to add value to your building with less risk than building a speculative building.

3. BULK WAREHOUSE

These are the largest industrial properties as they are usually regional distribution for various types of products and they require strong accessibility for trucks entering and exiting the highway system.

Occupants of the bulk warehouse sometimes ship goods directly to retailers and consumers, but the purpose of these warehouses is for the storage of large goods and same time act as a supply chain for distributors.

4. FLEX WAREHOUSE

Is an industrial building that may easily accommodate a wide range of uses. Another name for flex warehouse is ‘INFILL INDUSTRIAL’ It is commonly found in rural and densely populated urban areas. These properties have at least some office space connected to the warehouse and can accommodate a wide variety of users. Therefore, this type of industrial building is highly sought after by tenants going by its flexibility.

5. HEAVY MANUFACTURING

These properties are often owned by larger national companies, and these properties are usually heavily customized with machinery, chemicals and power necessities for the current user and their specific requirement.

6. LIGHT ASSEMBLY

Industrial properties that are used majorly to assemble products and ship them out to their distribution centre like flex space and light assembly can also be used for storage and office space (call centre, data centre).

7. COLD STORAGE

These industrial properties are solely to refrigerate and store perishable foods and produce. They are often used as the centre of distribution for chain groceries and require an HVAC (Heating, Ventilation and Air Conditioning) system and insulation setups that support and maintain temperatures ranging from 34-10 degrees.

8. DATA CENTRES

Are complex properties usually in centralized locations typically equipped with computers and networking equipment that is concentrated to store, process, distribute or allow access to large amounts of data? These properties require strong flooring to support the weight of the computers and electrical systems along with specialized HVAC systems, backup generators and other specialized equipment. As much as it may be, data centres must be close to major communication lines with access to extremely large and redundant power supplies capable of powering these servers and telecom machines.

9. INDUSTRIAL SHOWROOM

These properties are a bit of a combination of retail and warehousing. It allows manufacturers to sample their goods in a more retail setting while shipping and distribution are still taking place. These properties are attractive to small business manufacturers that make custom goods. Examples are; woodshops and cobblers because they can produce and at the same time showcase their goods to their customers thereby reducing the cost of shipping and warehousing.

10. RESEARCH AND DEVELOPMENT

These properties sometimes fall under the flex space category as they also are a combination of office, warehouse and manufacturing space. Users in this field like electronics, biotechnology, chemicals or drug development can be utilized by anyone researching newer products or science. These types of industrial buildings are located in industrial parks and companies where similar operations are carried out.