Capitalizing on the Warehouse Real Estate Market

Warehouse

Everyone knows that retail is evolving, and common thought says that retail that is not customer-focused will fail. Brick-and-mortar retailers with exceptional customer service or experiential offerings and food-related retailers will thrive. Contributing to this transformation is the rise in e-commerce. The popularity of e-commerce is not just hype; it is real and only just getting started. Our internal research has found that industrial and logistics is the most attractive sector for real estate investment for three years in a row. Companies like Amazon and Walmart will continue to force the evolution forward.

As a commercial real estate broker, these eight data points come up on every deal I do. If you are looking to capitalize on this evolution by investing in or selling/leasing warehouses as a real estate agent, start by making sure you have a solid understanding of these key factors.

1. Location

Let’s start with the obvious: Location is critical. The closer you are to wealth and large population centers, the better off you will be. Equally important is the proximity to highways and the area’s largest generators of commerce (think airports, seaports, hospitals, etc.). The better the location, the more desirable the property for potential investors and owners.

2. Big-Ticket Items

For industrial properties, you always want to ask about the roof and the HVAC or air conditioning units. If the roof is close to or older than 10 years, expect a ding in the valuation. The valuation can be effected by how large the roof is and what repairs, if any, will be needed. The first part of the roof to break down is the flashing or edges, so pay close attention there. Other issues can include standing water or perforations from equipment installations.

In South Florida where I am located, new roofs can cost anywhere between $7 to $9 per square foot. HVAC units 10 years or older may be functional but might require maintenance. These costs vary and can easily be determined by an HVAC repair company; these companies generally provide free estimates upon request. These repair amounts must be considered prior to an investment or lease.

3. Construction Type And Features

Concrete block structure (CBS) is the most common material used to construct warehouses here in South Florida. Butler Style are generally half CBS and half metal or 100% metal. The most advanced material being used today is concrete tilt-walls. They come prefabricated and predesigned so you can essentially “tilt” them up into place. Longevity and functionality are important considerations in an industrial property. Metal has the lowest score, followed by CBS, with the best system being tilt-wall.

4. Loading Types

The two primary types of loading are dock high and grade level, also known as “drive-in.” Dock high is designed for larger trucks, such as 53-foot-long semi-tractor trailers that are 18-wheelers. Dock high loading allows trucks to back up to the building and unload safely, quickly and efficiently. Older buildings tend to offer grade-level loading, as these properties were designed before modern trucks were on the road. However, today these buildings are used by specialty companies and smaller operators that do not yet utilize fleets of semis. As an example, a company that converts or repairs food trucks would find a grade-level building highly desirable, whereas a dock high building would not work for their use unless heavily modified.

5. Ceiling Clear Heights

Sophisticated warehouse tenants continue to demand taller buildings in order to maximize the amount of product a location can hold. Generally, tenants pay for floor space on a per-square-foot basis, not cubic footage. Therefore, the taller the warehouse, the better the value for a tenant. Heights start as low as 10 to 14 feet. Nowadays, the industry standard for Class A space is a minimum of 32-foot clear heights to the lowest point of the ceiling. In South Florida, I typically find a swing in rents from $3 to $4 per square foot for Class A space compared to 10- to 14-foot clear height options.

6. Parking

When it comes to parking, the more, the better. Typically, warehouses will have one parking space per 1,000 square feet. If you are lucky enough to have excess parking, stalls can be rented out separately. Or, if large enough, parking areas can be fenced and used as a storage yard or to expand a building. A parking stall in South Florida can fetch around $150 per spot per month, and a storage yard can garner $10,000 per month per acre or sometimes much more, depending on the location and if it has a building.

7. Electrical Infrastructure

Knowing the amount of electrical power a warehouse contains is critical. There are two main components to measuring power: amperage (amps) and voltage (volts or V). Amps can vary from 200 into the thousands for heavy manufacturing buildings. Volts are measured in three standard sizes: 120V, 220V and 480V. Think of volts as pressure — the higher the number, the harder a circuit can push electrons. Preferred voltage for today’s modern machinery is 480V. Generally, the higher the amps, the more valuable your space will be to manufacturing companies or distributors that run sophisticated conveyor and sorting systems.

8. Income

Income is as self-explanatory as location, but it’s worth touching on because there can be a few nuances. Generally, a fully leased building will sell to an investor, whereas a vacant or partially vacant building can be considered by a business owner (also known as an owner-user) for the company’s new home. Owner-users are less concerned with income and need to make sure there is enough vacancy for their own use. Investors today expect capitalization rates (returns) from 4.5% on the low end to 8% on the higher end. The swing will have to do with the risk, location and quality associated with each individual property. Value-add investors are looking for double-digit returns and are willing to take on more risk than normal.

Source: Forbes

Tags

You May also Like this

The New Certificate of ...

The Lagos State Government has said that in next two years 100,000...

Hybrid Work Environment and ...

As I type this, I’m awaiting my next Zoom meeting in what’s...

How to begin Investing ...

can be as simple as saving in a bank or as intensive...

Tips on Real Estate ...

The pandemic may have brought drastic changes to our daily lifestyle, however...

Things to avoid in ...

As an owner of a franchise, one of the biggest decisions you...

Pros & Cons of ...

 could be a very smart financial decision with proper planning and budgeting....

invest in real estate
Strategies to Invest in ...

There are an endless variety of ways to , from taking out...

Real Estate Technology Solutions
Recommended Real Estate Technological ...

Online real estate catalogues include virtual tours of sample flats to give...

Diversification
Diversification Vs Specialization of ...

There are two main schools of thought when it comes to :...

Real Estate Trend
The most common Real ...

is one of the most dynamic industries that have seen some major transitions in...

rental property
Can you buy rental ...

You’ve heard that buying a rental property can be a fantastic way...

Commercial Real Estate
The impact of COVID-19 ...

For a long time now,  real estate has been seen as a cash flow-generating...

Real Estate Market
Business Opportunities in the ...

With the economy fluctuating, more investors turn to the real estate market...

real estate professionals
Things Real Estate Professionals ...

During this , social unrest and an upcoming election, a lot has...

Virtual Real Estate
Blockchain Technology to monetize ...

In the “real” world, has historically been seen as a viable investment....

brrrr
What is the BRRRR ...

If you're part of the business or plan on breaking into it,...

Macroeconomic
Macroeconomic Issues in Real ...

Understanding macroeconomic risk is critical to a successful strategy. While this form...

Technology
How Technology is transforming ...

Technology is constantly transforming the way we live, and the commercial real...

illiquidity premium
What is Illiquidity Premium ...

Illiquidity premium is the excess return an investor stands to earn in...

renewal
The procedure for the renewal ...

According to Section 1 of the , the law vests the ownership of...

pandemic
Post COVID-19 pandemic and ...

Adapt. Innovate. Accelerate. This is the mantra for any business right now...

Real Estate Wholesaling
Real Estate Wholesaling Pros ...

wholesaling is a kind of arbitrage in which a party known as a wholesaler...

stamp duty
The new Stamp Duty ...

Taxes are one of the ways through which the Government generates revenue...

WFH
How Work From Home ...

Google has announced that it will continue with work from home (WFH)...

Investment Portfolio
Investment Portfolio Diversification in ...

Months after the onset of Covid-19, we continue to see its impact...

path of progress
What is path of ...

As a , you may have heard the term path of progress before. The...

Virtual Real Estate
Increase of Virtual Real ...

Prospective buyers getting their first glimpse of potential homes through smartphone cameras...

Property Managers
Operational Guidelines Property Managers ...

The pandemic crisis has thrown nearly all industries for a loop, and...

Commercial real estate
The Effect of the ...

The real estate industry is changing, a change that started before the...

Disruptive Real Estate
Disruptive Real Estate and ...

What do Google, Microsoft, Facebook, Twitter, Visa and American Express all have...

Post-Pandemic
Outlook of Post-Pandemic Commercial ...

The COVID-19 pandemic is having a transformative impact on (CRE) markets. The...

invest in real estate
Reasons you should Invest ...

Your current financial stability doesn’t guarantee that you’ll be free from financial...

Retirement
Real Estate Investments for ...

Real estate can be an incredible tool to help you prepare and...

Real Estate Industry
Tips to better understand ...

If you're looking to buy or sell property, it's important to have...

Real Estate Investment
Ways of getting involved ...

While many people get involved in real estate to generate a return...

value
How to assess the ...

If you’re investing in property, you’ll need accurate real estate valuations to...

Real Estate Investors
Guiding Principles for Real ...

While the national faces significant uncertainty right now, it's important to recognize...

Real Estate Investing
The largest benefits of ...

Real estate is one of the best possible ways to drive personal...

The Real Estate Market
How the Real Estate ...

If you're looking to buy or sell property, it's important to have...

Remote Working
Remote Working and its ...

Many ask if the remote working culture will be here to stay,...

buying and selling
Real Estate Buying and ...

EASTON — agents and their colleagues have adapted quickly to the new...

unstable market
Investing in Real Estate ...

The industry is filled with its share of ups and downs. In...

real estate investments
Real Estate Investments to ...

There are several types of real estate , but most fall into...

office space
Will the Pandemic make ...

A myriad of publications have already pronounced office space a trend of...

How the pandemic will affect Resident Demands in the future
How the pandemic will ...

The current pandemic and global response is a once-in-a-lifetime event that has...

real estate stock market
The effect of Real ...

Financial market commentators tend to focus on the price of bonds and...

digital asset
How Real Estate is ...

Yesterday, I had a call with one of my company’s larger customers....

Real Estate Agents
Ways Real Estate Agents ...

There is a reason companies like Tesla have such a loyal customer...

Commercial real estate investments
Commercial real estate investments ...

real estate investments will fare well in the face of the coronavirus, which...

Operational Real Estate
The importance of Operational ...

New York, NY—With the shift towards buying an experience over buying a...

Passive Income
Ways to Earn Passive ...

Passive income is an important factor in building wealth and achieving financial...

millennials
The Future of Real ...

We've all seen studies on millennials circulating around the internet. As the...

land
Things to consider before ...

Looking to buy land to build your dream home? Land is the...

Angel Investing
Angel Investing versus Real ...

I’m often asked what my preference is when comparing angel investing to...

Bitcoin Investment
The comparison of Real ...

Two popular avenues, real estate and bitcoin, have been making waves in...

mortgage
How to find the ...

If you’re looking to buy a home or in a single family...

Reserves
The importance of Reserves ...

Private real estate affords investors considerable control over their , from how...

attorney
The importance of an ...

Engaging the right attorney helps you avoid costly mistakes in deals. Especially...

bundle of rights
The comparison of bundle ...

What is “,” really? Most people might say it's the land and/or...

Lagos State Real Estate Law
Laws guiding the Use ...

The regulatory bodies in real estate include but are not restricted to the following;...

Commercial Real Estate Tech
2020 Top Commercial Real ...

Deloitte’s 2020 Commercial Real Estate Outlook surveyed 750 owners, operators and investors in 10...

Mortgage notes
Guide on investing in ...

Most new investors in active real estate start with a traditional method...

real estate rehab
Stages of Real Estate ...

If you play your cards right, rehabbing houses can be very rewarding...

Multifamily
Investing in Multifamily Real ...

Millions of Americans depend on cash flow generated by long-term investment portfolios,...

ways to invest in real estate
Ways to invest in ...

There is a common misconception that real estate investing requires property ownership....

rental properties
Pros and Cons of ...

Many investors understand why they should invest in real estate for the...

urban regeneration
Planners urge Lagos State ...

Planners have charged the Lagos state government to do more detailed master...

Commercial Real Estate Technologies
Trending Commercial Real Estate ...

The commercial real estate industry has entered a new phase of technology...

Real Estate Location as a franchisee
Tips to secure the ...

Real estate site selection has the power to make or break any...

Remote Workers
How Remote Workers affect ...

As more people are able to work from home, housing priorities have...

5G Technology
5G Technology REITs

There is a revolution going on. You’ve probably heard the term 5G...

buyers
Questions Home Buyers should ...

Buying a home is one of the most expensive decisions you'll ever...

remodeling
Mistakes to avoid when ...

Americans are spending less on home renovations than they were at this...

Real Estate Market
Reasons for investing in ...

Are you thinking about purchasing your first piece of real estate? Investing...

real estate funds and REITs
Differences between real estate ...

Are you ready to invest in real estate? Real estate funds and real...

Agents and Brokers
Differences between Real Estate ...

Real estate transactions often involve significant amounts of money. As a result,...

real estate crowdfunding
Real Estate Crowdfunding Investment

Ask a rich person how they got rich, and there’s a good...

Investing Real Estate Market
Investing in the right ...

Investing in real estate is tremendously exciting, and can be very lucrative....

housing in Nigeria
FMBN to build 100 ...

Ahmed Dangiwa, Managing Director, Federal Mortgage Bank of Nigeria (FMBN), said the...

local real estate market trends
Factors that determine Local ...

Real estate markets trend between times of boom and bust, depending on a...

invest in real estate
Affordable ways to invest ...

Real estate can help diversify a portfolio. One way to grow your...

real estate digital finance
8 top concepts of ...

In all history there has never been a more profound era of...

appraisal services
Why you need appraisal ...

Real estate investing can be an excellent way to earn passive income....

Real Estate Investment
Determining your Real Estate ...

Malcolm Gladwell states that it takes 10,000 hours of practice to become...

real estate agent
12 Qualities in Selecting ...

Purchasing a home is a huge financial commitment, so finding the right...

National Urban Development Policy
Revision of the National ...

The long-awaited overhaul of the National Urban Development Policy (NUDP) has been...

Mixed-Use Real Estate
Benefits of Mixed-Use Real ...

In cities, mixed-use real estate is hidden everywhere. Someone likely lives above...

dead capital
Real Estate Dead Capital ...

PwC estimates that Nigeria holds at least $300 billion or as much...

Post your Comments

NAME *
EMAIL *
Website

%d bloggers like this: