A variety of factors is driving the increased interest in industrial real estate properties, including limited inventory and rising demand.
Overall, industrial real estate is seen as an excellent opportunity for the rest of 2014 as well as moving into the next year. The interest in industrial real estate investments is largely driven by an increasing demand that is expected to continue outpacing the available supply levels. Now that the economy is finally recovering in many areas of the country, demand is increasing.
Unfortunately, stagnant development over the past few years has led to a limited inventory in many areas. Additionally, rents are finally on the rise once again, serving to further lure commercial real estate investors with an eye toward maximum profits.
Industrial real estate properties typically fall into two broad categories. Warehouses can cover the gamut from personal storage to wholesale outlets. While tenant stability is typically not as good in small spaces due to a month-to-month rental basis, manufacturing and wholesale warehouse spaces are an entirely different story. Industrial buildings are once again in demand by manufacturing and major industrial firms. With tenants typically paying for everything, including utilities and maintenance, such commercial real estate properties represent an excellent investment opportunity.
Compared to other commercial real estate options, industrial properties certainly offer an excellent opportunity at the moment. While many investors consider multi-family properties to be a bit too expensive and office rental rates have not completely recovered in some markets, industrial real estate offers the perfect blend of affordability and demand. Commercial real estate news reports indicate that capital is currently flowing into this CRE sector at a much higher rate than ever before. The strong demand for industrial space is countered by the fact that very few new spaces are being developed.
Of course, as is the case with any investment, the key is for investors to ensure they choose the right market. Markets representing the strongest growths within the industrial sectors are Edison, NJ and Phoenix. Surprisingly, Detroit has also shown significant growth in the occupancy of industrial properties.
Additionally, when it comes to industrial real estate investments, sub-markets can also prove to be imperative. Oklahoma City is a prime example of this. The city has recently reported stable lease rates, good absorption and rental growth within three of the city’s five submarkets.
Performance can and does vary widely around the country. Overall, however, the numbers indicate that the recovery is spreading at a fairly even rate across the country. Existing inventory is filling up rather quickly in many areas, leaving ample opportunities for developers.
Domestic investors are not the only buyers to be interested in investing in industrial real estate in the US. A growing number of foreign investors have recognized the potential for high yields and are now turning their attention to industrial properties, as well.
Source: The News Funnel