Investing in real estate is almost always a great idea as long as you take an active role in deciding where to put your money. But moving into the commercial sector can be overwhelming if you’re not sure which area to invest in.
One of the more lucrative sectors to invest in is industrial real estate. This category includes properties that are used for businesses like furniture showrooms, technology distribution, laboratories, and other large-scale buildings.
It’s not as commonly considered by novice investors who don’t think about the potential for growth. But there are many reasons why you should consider branching out and investing in industrial real estate.
10 Reasons Industrial Real Estate is the Next Best Investment
- Property is in high demand. With so many cloud-based businesses needing storage facilities (think: Amazon and newer billionaire start-up LeVel), these commercial properties are in high demand for companies that can afford your terms.
- Higher return on investments. With the high demand and more consistent tenant bases, you will have less fluctuation on your investment returns. These types of properties rarely require more than basic upkeep and maintenance, making them a hands-off investment after the initial startup. When you’re ready to sell, commercial property disposals are available.
- Less turnover. Most industrial real estate tenants are bigger companies who don’t want to deal with short leases, instability of rising rates to stay, and regular moves. So they’re willing to sign long-term leases, from 3 to 5 years or longer if the terms are amenable to both parties. And because they are usually reputable businesses, you have regular, reliable income coming in monthly.
- Easy upkeep. Most of your industrial tenants aren’t going to come to you for every little fix and repair like residential tenants would. They have on-site repair people to quickly take care of regular issues, so unless there’s a significant problem, they will be independently maintaining their space.
- More diversification in your portfolio. Real estate usually depends on the market, but with a better diversification, you can ride out the lows and enjoy the highs.
- Better inflation hedging. With real estate often in high demand, especially industrial real estate, you will have a high potential for growth and less impact from inflation rates.
- High asset value – Assets like stocks don’t have a tangible backup, but industrial real estate has the physical property to protect your investment. This increases your asset value automatically.
- E-commerce is booming – With sales in the billions already and only climbing, e-commerce businesses are everywhere. This ensures that your investment has a solid chance of staying successful in the future, too.
- Multiple options are available. You don’t have to start from scratch for your investment. You can choose to build the entire property yourself, refurbish current buildings, and modernize what’s already there.
- You can use a broker to do the hard work. Once you’ve invested in your property and gotten it ready for tenancy, you hire a broker to find your tenants and be the go-between.
Industrial Real Estate: A Sound Investment Strategy
With these 10 reasons and many more, diversification into the industrial real estate sector is a great decision for the informed investor.