Why Industrial Real Estate Is Still a Top Investment
Industrial real estate continues to outperform many other commercial properties. Even during economic uncertainty and a change in work patterns, industrial real estate still seems to thrive. Yes, the office and retail sectors are constantly facing challenges. Additionally, there is more of a demand for warehouses because of the number of brands that are selling ecommerce products. This is a gold mine for investors because not only will it offer a stable cash flow, but also create long-term wealth as the property value increases. Plus, it helps to diversify the portfolio of a property investor.
E-Commerce Is Leading The Way
The continued growth of ecommerce brands is one of the reasons why industrial real estate is worth considering for an investment. More and more brands offer next-day delivery, not to mention that people rely on Amazon more for their everyday essentials. Due to the demand for these brands and everyday items, more warehouses are required, making it a great investment for investors because it doesn’t show any signs that it is going to slow down.
Resilience Across Economic Cycles
Historically, real estate has proven to be very profitable for investors, even during economic uncertainty. This is because businesses still need to sell their products and have a place to store them. Furthermore, distribution needs to be completed along with manufacturing goods. Industrial tenants sign long-term leases, which means there is more security with it, and it provides investors with a stable income. Not to mention eradicating turnover risk.
Limited Supply and Strong Rental Growth
In most major markets, the supply of industrial land is constrained by zoning laws, high land costs, and competing uses. Due to this, both the high demand and the limited availability of industrial properties have driven the strong rental growth as well as increased property values. Whoever invests in industrial real estate properties will benefit from consistent cash flow and long-term appreciation.
Lower Operating Costs
Something else to remember with this type of property is that they can have low operating costs. For example, a car park in London can be affordable to run, especially once you have the barrier systems and CCTV cameras installed. Then, during busy periods, you may require a security guard at the gate, especially at the weekends. However, in terms of overall outgoing costs, it isn’t a lot of money. The lower the operating costs are, the more profit is generated with a long-term lease.
Diverse Tenant Base and Use Cases
Another great benefit to industrial real estate is that there are a lot of businesses that need it. You can have a wide range of clients, such as manufacturers, logistics providers, wholesalers, data storage companies, and last-minute delivery services. This diversification reduces reliance on a single industry and allows you to have an exit strategy if one industry is something.
Strong Capital Market Interest
Institutional investors, private enquiry firms, and REITs all allocate capital towards industrial assets. This strong buying demand provides liquidity and support pricing, making industrial real estate one of the best commercial sectors around the world.
To Conclude
Commercial real estate is a great investment because it offers strong rental yields along with great returns when you look to sell the property long-term. There are a lot of long-term profits with this. Additionally, you have the added benefit of a limited supply because there aren’t many industrial real estate properties. No matter what type of property you consider, whether that is a traditional warehouse, an urban logistics hub, or a spot that is for a city centre car park, we can guarantee that there is a lot of profit which will be returned.
