Expanding into new sectors can be an excellent way to increase revenue or protect against market instability. If you are a commercial real estate investor, looking into the promise of industrial real estate might be for you. But what is industrial real estate? What makes it different from other types of real estate investments?

This post will define industrial property and consider some factors that set it apart from other sectors.

What is Industrial Real Estate?

Industrial real estate or industrial property is any land or buildings used for industrial activities. They are generally not open to the public. Most cities also restrict these properties to areas away from homes and other businesses.

The following are common types of industrial properties:

• Manufacturing Plants
• Warehouse Buildings
• Logistics Hubs
• Energy Facilities
• Data Centers
• Research Facilities
• Flex Space

Commercial vs Industrial Property

When most people think of commercial real estate, it is sectors like retail or office space. Industrial properties are also a type of commercial real estate. However, they are different from most other types of commercial properties since they are not customer-facing. Instead, they are more functional and usually not open to the public.

One noticeable difference is that industrial property typically has different zoning from other commercial properties. Industrial activities are often disruptive to the surrounding area. For that reason, most cities limit industrial activities to exclusive zones away from homes and public commercial areas.

Advantages of Industrial Real Estate

Many investors prefer industrial properties for several reasons. The following are some of the advantages of investing in industrial real estate:

• Rental Income: Industrial space tends to attract a higher price than other commercial properties of comparable size.
• Low Turnover: Investors can expect less tenant turnover and stable cash flow with industrial properties.
• Flexible Uses: One of the best things about industrial real estate is that many properties are adaptable.
• Maintenance Costs: Most industrial properties have lower maintenance costs for investors than other commercial spaces.

Risks of Industrial Properties

While the benefits of industrial real estate make it attractive, it is not without risk. The following are some of the common risks associated with industrial properties:

• Larger Down Payment: Industrial properties usually require a higher upfront investment than other commercial real estate.
• Interest Rates: Many lenders charge higher interest and fees for loans on industrial properties.
• Vacancy: While turnover is usually lower, vacancy can be a greater risk for industrial properties. Finding new tenants can often take longer when the space is empty.
• Obsolescence: Various industrial uses can change rapidly. As technology evolves, older facilities may risk becoming obsolete for some purposes.

Are you interested in industrial properties in the Columbus, GA, region? Click here to contact the Cummings Commercial Team. We are local CRE experts ready to help investors reach their goals.

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