Commercial real estate is a confusing space in the investment world. There are so many options to choose from that it’s easy to misunderstand market trends and make a less profitable investment. Traditionally, commercial real estate combines retail, industrial, office, land, and multifamily. Demand for one kind of real estate needn’t be the same as for another. In recent years, we have seen an upward trajectory in the demand for industrial spaces. Texas specifically has shown outstanding metrics. According to statistics, by the end of the 2020 calendar year, the U.S. totaled around 27.7 billion square feet of industrial real estate, of which 9.2% came out of Texas alone! The Texas industrial real estate market is booming and faring higher than other states in the country.
These metrics sound exciting and may spark the interest of any prospective investor. However, there is a big question that first needs answering – What kind of industrial real estate would be the best and most profitable option for an investor? To answer this, one must know the different kinds of industrial real estate in the current market. Industrial real estate can be broadly divided into three categories – manufacturing, logistics, and flex or R&D buildings. Knowing which is a better investment depends on your investment profile, investment amount, location, market demand, and more. This is precisely why having a professional on hand who is an expert in the industry is crucial.
Let’s take a closer look at the three kinds of industrial real estate:
Manufacturing Buildings
Manufacturing facilities are where goods are produced, held, and shipped. The raw materials used in the manufacturing process, as well as the machinery that is used to produce the products, are often stored on-site. The staff who operate the machinery and assist the production process are usually present during the day-to-day functioning of the manufacturing unit. These buildings can either be “freestanding” or part of a larger structure, but they typically have more power feeds, 10-30% of total square footage in office space, ground-level loading doors vs. truck-high loading doors (some may have both), fenced outside storage areas, and a warehouse clearance of 14 to 24 feet under-beam in the warehouse/plant area. These units often have more parking spots and greater office space.
Logistics Warehouses
In the past, logistics buildings were known as distribution warehouses. These are units responsible for staging, storing, and delivering products. In most cases, no manufacturing or assembly takes place on-site. As a result, the logistic warehouses have fewer employees and workers and almost no raw materials. Logistics buildings need truck-high loading, warehouse clearance of at least 24 feet, and a truck-turning radius of at least 130 feet. The ‘perfect’ logistic warehouse would be a fairly rectangular unit equipped with a “cross-dock” loading to minimize the distance between the loading and storage areas. Since these warehouses employ fewer staff members, office space premiums and parking spots are lessened. Typically, logistic warehouses feature a parking ratio of one parking place per 1,000 square feet, but these figures are, of course, subjective.
Flex Buildings
The advancement of technology in the late 1980s gave rise to a new kind of industrial real estate – flex buildings or research and development units. Flex buildings typically employ a large number of skilled workers and require ample parking, power, office percentage, and layout features. Office space is prioritized over the loading area, clear height in the warehouse, and outside yard storage. The “mezzanine second story” was created by R&D building developers to make it possible for a smaller lot to accommodate a larger building. All of these, however, are subjective claims. Every flex building is unique and includes features exclusive to its sector.
Investing in real estate can be a tricky business if not done correctly. Having an expert guide you through the process is not just advised but is essential for successful investment. Do not make real estate or other investment decisions by yourselves without the supervision of an advisor or broker. TC Global Commercial offers expert advice, consultation, representation, and more. Get in touch with industry experts and begin your investment journey toward successful wealth management.
What You Need To Know About Closing
Real Estate Articles / May 11, 2022
Whether you are buying property or selling property, closing is a crucial part that will make or break your deal. We have listed major pointers that will help you deal with your next closing much better.
Transforming Houston: Council Greenlights Progressive Changes for Affordable Housing and Pedestrian
Real Estate Articles / Nov 23, 2023
Revolutionizing Houston\'s Housing Landscape: City Council Approves Sweeping Changes for Affordable Housing and Pedestrian Safety
Where To Find Real Estate Investment Opportunities In The Current Market
Real Estate Articles / Mar 23, 2019
Commercial Real estate investors, looking to maximize profits have set their sights on Texas. The Lone Star State has made a name for its self as a strong market for Commercial Real Estate Investors.
Reviving Campus Spaces: Adaptive Reuse Solutions for Modern Education
Real Estate Articles / Jan 26, 2024
Transformative Real Estate: Navigating the Evolution of College Campuses through Adaptive Reuse and Strategic Solutions
How you can profit from investing in Texas wetlands
Real Estate Articles / Dec 21, 2022
Wetlands are profitable investments if done right. Texas has multiple real estate investment options, including wetlands and you can get great returns on investment from them.
Legal Victories Unleash Potential to Cut Property Taxes - Impact on Hospitality and more
Real Estate Articles / Nov 15, 2023
Landmark Court Decisions Pave the Way for Lower Property Taxes and Intangible Asset Considerations
Navigating the Future of Real Estate: Trends in Houston and Beyond
Real Estate Articles / Jul 19, 2024
the real estate landscape is rapidly evolving, with online homebuying, smart home integration, and virtual interior design becoming increasingly prevalent.
What developers are saying about the 2023 real estate market
Real Estate Articles / Apr 26, 2023
The 2023 market condition,specifically commercial real estate development and construction industry is set for significant growth and innovation. Developers are saying that recession may be mild, and many growth and investment opportunities\'ll arise.
Why Invest In Retail Properties?
Real Estate Articles / Mar 09, 2019
Are you considering investing in commercial real estate? Not exactly sure which type of property to start with? Fret no more!
Purchasing Commercial Real Estate? Consider These 5 Things Before You Buy
Real Estate Articles / Feb 09, 2019
Whether you are a seasoned investor, or you\'re researching for your first property there is always a certain risk factor that makes us hesitate before signing the dotted line.
