Industrial buildings are structures that are designed for storage, manufacturing, assembly, flex spaces (office/storage/retail), distribution/logistics, or warehousing operations.
Investing in industrial real estate can provide a number of benefits, including:
- Income potential: Industrial properties often have a higher net operating income (NOI) compared to other types of commercial properties and can provide a steady stream of rental income.
- Long-term leases: Many industrial tenants sign long-term leases, providing a stable and predictable cash flow for investors.
- Low vacancy rates: Industrial properties typically have lower vacancy rates compared to other commercial properties, which can help to mitigate risks for investors.
- E-commerce growth: The growth of e-commerce has led to an increase in demand for industrial properties as companies look for distribution centers and warehouses to store and ship their products.
- Diversification: Investing in industrial real estate can provide diversification for investors, as the performance of industrial properties is often not closely tied to the performance of the broader stock market.
- Inflation hedge: Industrial properties may provide a hedge against inflation as rental income can increase with inflation, and property values can also appreciate over time.
- Tax benefits: Industrial properties can provide tax benefits, including depreciation and cost segregation, which can reduce an investor’s overall tax liability.
As with any real estate investment, location, and timing are also important factors to consider.