In the current business environment, things seem to be getting hotter; traditional investment means look hazy, stocks are becoming undependable, the deposits that banks pay seem not adequate, capital is depleting, and expenses keep on rising every time. However, consider that as the prices of things are rising, real estate prices seem to be at an all-time high. Investors who are serious about investing in the real estate market can see this scenario as a potential for opening up great opportunities for investment.
What is the challenge?
Most commercial properties like warehouse have presented lucrative opportunities for investment. But, the challenge is that most investors seem to acquire the over rusty warehouses for their businesses. Everyone seems to be pegged on thinking about rusty old warehouses instead of keenly to look at a good commercial building that has a nice shop space to invest.
Since labor is proving to be expensive, most companies are moving away from importing and distribution to production based influencing the setting up of factories that involve fewer labor costs. As a consequence, import volume is given to escalate leading to the growth of storage demand for such imported commodities.
From a survey conducted recently, vacancy in industrial warehouses seems to range between 4 to 6% in comparison to shopping buildings that have a vacancy rate of 13.7%. As the country seem to be sliding into a recession and warehouse construction, seem to have hit the minimum, warehouses rate is anticipated to improve further owing to the steady inventories increase.
Attractive aspects in a warehouse
It is always a nice idea ensure that features in the warehouse are attractive to potential tenants. It may be impossible to meet the requirements of every tenant but, it is advisable to maintain a certain standard that is acceptable in the industry.
The clear height is the height of any warehouse that is very crucial. It is the distance between the clear ceiling and the floor that is referred to as the clear height. It implies that there should be no obstruction like a bar running across, a pole or a fan in height. Such a height is usually crucial when it comes to cartons stacking and storage. While the earlier norm used to be 12 to 24 feet, most warehouses nowadays have a clear height ranging from 30 to 32 feet.
When any baggage comes or goes out, it will need somewhere where all the loading work can be done. Unloading a parcel can be done in any area, whether outside or inside the warehouse. However, an external loading dock is a preferable place for most businesspeople. An outside space avoids the inconvenience that a buyer can cause than segregating a space inside it. So, the loading dock should not be ignored when choosing any warehouse investment.
Area of the land
When it comes to land, it usually depends on the kind of business processes that a particular warehouse will be hosting. But, for purposes of having ample parking or extra storage space, it is always advisable to ensure the property entails more space.
A good storage facility ought to be located in proximity to cargo docks, expressways or ports. Normally, those located near such facilities are of a higher value than those far away because most business people prefer not to spend much on fuel to transport commodities.
Security is another consideration that investors consider as a unit that has enough security tend to be higher priced. Mechanical operated doors in a unit is the other consideration that some tenants prefer when choosing a premise.
Traditional warehouses usually have no cinder-block, windows and are normally low construction buildings near a faraway smoke-stack. Some buildings or cluster of buildings have self-service units with varying sizes of separate storage spaces. Other than just retailers and importer, such spaces can accommodate a wide range of users.
An office in a warehouse is important as it is the place a businessperson will be carrying out the crucial transactions in the warehouse. If you are in need of a dedicated office space in the warehouse, you can allocate 5-8% of the property’s square footage to the office. If space seems more, the tenant might reconsider the worth of a lot of space, but, if it is less the tenant will need to spend more in case of expansion.
Kind of tenants attracted to warehouses
Some of the major tenant groups that can be hosted are;
Basements are being compromised as the homes are shrinking due to lack of space. Most units have homes that seem modular or mobile that cannot allow for storage. It is good for units to have enough space to store seasonal equipment such as skis or snow blowers that many of these families might need.
Finding anything substantial in many apartments around is hard. Even more, affording a family home for some people who reside in the apartments is usually a hard task. To keep their extras, these tenants try to acquire extra storage space. As long as there is enough space to store extra furniture, the dweller will appreciate such a unit.
Local Business operators
Amongst the largest self-service warehouse users are the local business operators. The currently available shop spaces consist of a low square footage that does not allow business people to keep stores and files in the operation place. Such individual will prefer to search and rent a space that is close to their operation place to store their things. Some of those individuals are auditors, lawyers, doctors, insurance agents who normally want to keep old files for some years. Due to this reason, self-service storage facilities are largely occupied by such tenants.
If these are the type of tenants that you need let into the warehouses, ensure useful facilities are located near the residence or workplace. It would also be more convenient to locate such facilities near an expressway or the main road.
Industrial vs. other real estate investments
Various reasons make industrial real estate investments better compared to other real estate investments.
Fewer management worries
Occupants of industrial properties are blue color workers or companies who are keen on ensuring the property rented is properly managed. So, the owner of such property will not get complaints on petty issues like inadequate toilet plumbing, burned out light bulbs or the dirty state of the facilities.
Stability is greater in the long-term
The good thing is that industrial properties normally have longer lease period that can be as small as 3 to 5 years or as big as 8-10 years. Even if their turnover seems much less than other commercial properties, the longer lease periods compensate for the discrepancy. An industrial investment is more stable making it more productive than a commercial investment.
Industrial property is a more stable investment that offers steady returns compared to other traditional forms of investments. In essence, it doesn’t have the low and high swings that other investments like bonds that normally undergo through such scenarios.
Different users have different warehousing needs depending on the circumstances that their operations occur. Take into consideration that not all clients require an office room, a lot of space or a high ceiling. Therefore, whatever space you intend to rent out, ensure you analyze the potential tenants so that you can fulfill the needs at hand.
In the current business environment, the commercial property sector seems to be escalating as it takes away the attention of the industrial sector. Therefore, as the industrial sector shrinks, the demand for such properties will escalate eventually making industrial properties to fetch much higher prices.
If you keenly take into account the users’ needs, industrial warehouse investments are much more viable investment options that offer more lucrative returns than other investments.