Industrial real estate is a valid area of investment with extensive potential for profit, but most individuals feel more secure in residential property because the latter is well-known and popular. There are different subspecialties of the industrial property market, such as warehousing, distribution and manufacturing. If you are looking for new investment options, here are some reasons why industrial real estate may just be the perfect fit.
The leases of industrial properties are longer compared to other types of commercial real estate and, therefore, more stable. Typically, the tenant will sign for at least a three to five-year lease and others will negotiate for an even longer term. Fewer turnovers mean that the property is only vacant for short periods and the potential for lost revenue is reduced. Other property types suffer distress due to the dynamics of the trade. For instance, the hospitality industry has the shortest leases, which results in longer durations of vacancy and a lot of lost potential revenue.
Industrial space requires little managerial input from the owner. The tenants are usually companies with proactive employees who will tackle the problems without assistance. Small challenges such as power supply and plumbing systems are fixed without the direct involvement of the landlord. In alternative investments, you will be required to cover minute details which can take up most of your time. In residential property, you will have to employ a full-time manager to deal with the presented issues. In addition, businesses that require industrial property are reliable with regard to finances, and there are few or no landscaping requirements.
Commercial property has higher returns and more so in the industrial market. The competition for this type of real estate is not high, and there are rarely any significant changes in the market. Even with retraction in the economy, the effect is minimal and your investment will be fairly safe. Unfortunately, the appreciation may also not be as significant as seen in other property types in case of an improvement in the general economy.
Industrial property is quite versatile and can be adapted to accommodate different types of businesses without excessive effort. This flexibility ensures that you can provide the tenant with exactly what they need. If you invest in a typical warehouse, you can transform it into a bakery or even a lab. These changes are not easily applicable in other forms of real estate.
For more information, contact a business such as 4 One 4 Real Estate.Share