There are many different types and uses for industrial properties, which leads to an array of structures associated with each. If you are looking to invest in industrial real estate in San Antonio, it is important to understand the different types of industrial properties. Keep in mind that while the follow list coves a wide variety of industries and uses, some of these properties can accommodate other industrial uses as well, which should help determine the types of tenant options once the industrial property is purchased.
Types of Industrial Real Estate
Types of Industrial Real Estate
In the remainder of this post, we’ll cover 10 of the most commonly found types of industrial real estate. These industrial properties range in function, size, and affordability. Yet each one presents a unique opportunity to an investor looking to diversify their portfolio through industrial real estate.
Industrial land is land that is zoned industrially, but does not have any permanent structure on its premises. A site like this doesn’t always have to have a building on its grounds in order for an industrial business to operate. The land may be used for purposes such as parking equipment, storing gravel or mulch, etc. Investing in industrial land also gives you the opportunity of building from the ground up. Vacancy rates in the Industrial sector of commercial real estate have been historically low, so building a structure on your industrial site carries a much lower risk. Owning industrial land allows investors multiple routes for high yield returns, such as selling the space as an industrial build-to-suit property.
Industrial Build to Suit
You may have seen a sign on a piece of land before that says “build to suit.” A build to suit is an advertisement to businesses who may be looking for space for their company. In a build to suit, a landowner pays for the construction of a structure according to the tenant’s specifications and then leases that building to the tenant once the building is delivered. Build to suit options can be great for industrial land owners because you don’t have to worry about the building sitting empty, as a lease has already been secured with the company who contracted the investor to build the structure. This type of industrial real estate investment presents less risk than building a “speculative building,” which is constructing a building with the intention to immediately sell it. However, “spec buildings”, can add great value to the land. For example, general warehouse space is a hot commodity in industrial real estate markets and allows you to meet demand by delivering a brand new warehouse to the market.
Bulk warehouse properties are the largest industrial product and are typically in the 50,000-1,000,000+ square foot range.These properties are usually regional distribution for various types of products and require strong accessibility for trucks entering and exiting the highway systems. Most bulk warehouses are located just outside of metro areas due to their large footprint. Tenants of bulk warehouses typically use them to store bulk goods and act as a main supply chain for a multitude of retailers and distributers.
As the name implies, a Flex Warehouse is a industrial product that may easily accommodate a wide range of uses. These warehouses usually have at least some portion of office space connected to the warehouse and can widely range in size to fit your small mom and pop plumber to regional granite distributors and more. Flex warehouses can be found in both rural areas and densely populated metro areas. In metro areas, flex warehouses are often referred to as “infill industrial” properties. Infill industrial properties are highly sought after by investors and tenants alike because of their ability to accommodate a wide variety of uses and businesses.
Heavy manufacturing industrial properties are where heavy machinery, chemicals, and massive amounts of power are required. Examples of heavy manufacturing would be a GM assembly line or a DuPont plant. These types of properties are most often owned by large corporations, as these industrial properties are highly customized for the current tenant. Tenants tend to occupy these sites for long periods of times (sometimes for multiple decades) because it would be very inconvenient (and expensive) to relocate such large operations.
Light assembly industrial has a fair amount of crossover with flex space, but unlike heavy manufacturing, light assembly space isn’t typically utilized to manufacture materials, simply to assemble them and ship them out to distribution centers. Similar to flex warehouse spaces, light assembly industrial real estate can also be used for storage and office space.
Cold storage and refrigeration warehousing is refrigerated warehousing intended to store perishable food and products. Cold storage is often used as distribution centers for chain groceries and require HVAC systems and insulation setups that are able to support and maintain temperatures ranging between 34 degrees to -10 degrees. Increases in consumer demand for fresher food and grocery delivery, cold storage has increased significantly since 2000. Similar to heavy manufacturing sites, these spaces are build out intensive and tenant retention can be very high.
Data Centers are very complex properties usually in centralized locations that are typically equipped with computer systems and networking equipment. Data centers provide important services such as data storage, backup and recovery, data management and networking. These centers do things like run Web sites, e-mail, and instant messaging (IM) services, provide cloud storage and applications, and help perform other duties that require computer processing. The demand for data centers is only increasing as more businesses are requiring access to their own data center or access to someone else’s. Because of the large amount of high-tech, specialized equipment that these centers use, the electric and power systems that run these buildings are extremely complicated and expensive, which makes new construction of these sites very costly.
Industrial showrooms are a bit of a hybrid between retail and warehousing. These properties allow manufacturers to showcase their goods in a more retail style setting while also being home to their shipping and distribution center. Showrooms are often situated along interstates where they can achieve high visibility and provide easy access for consumers. These sites are attractive to small business manufacturers that make custom goods (such as custom home builders).
Research and Development
Research and Development sites may sometimes fall under the flex space category as they can be a hybrid of office, warehouse, and manufacturing. Research and development industrial real estate spaces are typically used by the electronics, biotechnology, chemical, or pharmaceutical industries. These buildings are located in industrial parks or on campuses that contain other similar operations.
Casey Development, Ltd: Industrial Real Estate Developers in Central Texas
As you can see, there’s not shortage of investment options when it comes to industrial real estate. Casey Development, Ltd. has the experience and expertise to help you navigate to the right industrial real estate investment opportunity. Contact our team of industrial real estate developers to learn more about our services.