References
NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.
Types of Warehouses
Warehouses are the most common types of storage, however other forms do exist (i.e., storage tanks, computer server farms, etc.). Some warehouses are massive structures that simultaneously support the unloading of numerous in-bound trucks and railroad cars containing suppliers' products while at the same time loading multiple trucks for shipment to customers. Here we look at five different types of warehouses:
- Private Warehouse: Owned and operated by channel suppliers and resellers and used in their own distribution activity.
- Public Warehouse: Space that can be leased to solve short-term distribution needs.
- Automated Warehouse: Advances in computer and robotics technology have enabled many warehouses to feature automated capabilities.
- Climate-Controlled Warehouse: Space that is capable of storing many types of products including those that need special handling conditions.
- Distribution Center: Warehouses where product storage is considered a very temporary activity.
Source: Types of Warehouses (KnowThis, 2019)
Industrial & Warehouse Trends
Commercial Real Estate is Slowing Down in Q3 2022 (Economists’ Outlook, Oct. 6, 2022)
“The industrial sector continues to outperform. Demand is robust as net absorption was nearly 425 million sq. ft. in the last 12 months ending in Q3 2022. Although demand may have tapered, the volume of industrial space absorbed continues to be double that of pre-pandemic times. As a result, this sector had the lowest vacancy rate, at 4%, of any other sector in the commercial real estate market. As demand remains strong, rent growth of industrial spaces continues at historic highs, rising by a double-digit percentage (12%) in Q3 2022. Meanwhile, rents are rising even faster for logistics space by 13.5% year-over-year.”
Commercial Market Insights (National Association of REALTORS®, Oct. 2022)
“Amid an improving economy, the demand for commercial real estate continues to recover, but the recovery is uneven across property types and geographic markets. There is strong recovery in the multifamily, industrial, and retail property markets, while the recovery has not been as robust in the office and hotel property markets. High transmission of delta variant cases in 97% of counties has held back the return of workers to the office and business and recreational travel.”
What Could You Create?: Commercial Brokers Bring Their Imagination and Market Savvy to Bear in Finding New Uses for Existing Buildings (REALTOR® Magazine, Sep. 20, 2022)
“Churches turned into art centers, factories into microbrew pubs, and shopping malls into medical facilities are just a few examples of adaptive reuse, the term used to describe the repurposing and transformation of an existing structure. While adaptive reuse is not new, changing business and social factors are driving renewed interest. These factors include a hybrid workforce, supply chain disruptions, increased interest in green construction and a lack of affordable housing. The result: more opportunities for commercial real estate brokers to think differently about the highest and best use of a property.”
Industrial Space Demand Forecast, Third Quarter 2021 (NAIOP, Aug. 2022)
“Demand for industrial real estate continues to be strong as the long-term trend toward e-commerce (and away from in-store sales) continues with no end in sight. With nearly 100 million new square feet delivered nationally since the beginning of the year, 450 million square feet currently under construction and another 450 million planned, the demand for industrial real estate still outpaces supply.
Because of this, authors Dr. Hany Guirguis and Dr. Michael Seiler forecast that total net absorption in the second half of 2021 will be 162.6 million square feet with a quarterly average of 81.3 million square feet. In 2022, the projected net absorption is 334.6 million square feet with a quarterly average of 83.6 million square feet.”
Brokers Get Creative in Adding Industrial Space (REALTOR® Magazine, Jun. 17, 2022)
“With nationwide vacancy rates for industrial properties registering record lows and pricing for those assets skyrocketing, brokers and developers are devising creative strategies to meet the insatiable appetite for space fueled by the e-commerce boom and supply chain issues.” Learn more about how brokers are rethinking and modifying existing spaces to take advantage of the influx of industrial and warehouse properties in local markets.
Industrial Demand Will Continue to Boom Through 2026 (Globe St., Sep. 28, 2021)
“Over the last few years, bolstered by an unprecedented boom in e-commerce and retail sales, the industrial sector has posted historically high demand and supply growth. And that’s led some analysts to question how long the ride can last for the sector that’s relatively unaccustomed to such a meteoric rise. In short, some are wondering whether the current boom is a bubble or something more sustainable.”
Industrial & Warehouse Investment
Industrial REITs (NAREIT, Oct. 2022)
“Industrial REITs own and manage industrial facilities and rent space in those properties to tenants. Some industrial REITs focus on specific types of properties, such as warehouses and distribution centers. Industrial REITs play an important part in e-commerce and are helping to meet the rapid delivery demand. Nearly 145 million Americans live in households that invest in REITs. With their historically competitive total returns and comparatively low correlation with other assets make them an attractive addition and diversifier for many Americans’ portfolios.”
Brokers Readjust their Thinking in a Post-Pandemic Market (Society of Industrial REALTORS®, Summer 2021)
“Office and industrial properties present a tale of two markets, post-pandemic. On the one hand, the industrial sector has exploded, as providers of product continue to ensure that grocery shelves remain stocked while keeping pace with the accelerated demands of e-commerce. On the other hand, the pandemic is forcing office occupiers to pause and rethink their space needs, even to the point of downsizing to the relatively open spaces of the suburbs with renewed interest.”
How to Approach an Investment in Industrial Property (JLL, Sep. 25, 2020)
“Industrial real estate can include warehouses, factories, depots, and storage facilities, and is often inexpensive to own and operate. It typically provides stable cash flow with long-term tenancies. So, how should you approach an investment in industrial property? As with any investment, it’s important to conduct careful research and be fully aware of the risks associated. While there are many benefits to owning industrial property, it can be a major financial burden if not investigated properly beforehand. With that in mind, [here are some] steps you should take before investing in industrial real estate.”
eBooks & Other Resources
eBooks.realtor.org
The following eBooks and digital audiobooks are available to NAR members:
Commercial Real Estate Investing 12 Easy Steps to Getting Started (eBook)
Commercial Real Estate Investing – A Creative Guide to Successfully Making Money (eBook)
The Commercial Real Estate Revolution (eBook)
The Complete Guide to Real Estate Finance for Investment Properties (eBook)
Successful Real Estate Investing — How to Avoid the 75 Costly Mistakes Every Investor Makes (eBook)
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