Industrial

The industrial sector is arguably the least glamorous commercial real estate asset class. There are no elaborate architectural design features, resort-like amenities, or high-profile addresses. Instead, industrial real estate is intended to provide practical and efficient space to businesses that prioritize function over form. Industrial buildings are suitable for a variety of uses such as manufacturing, research and development, and the storage and distribution of goods.

Demand for industrial assets is heavily dependent on the overall strength of the economy and growth—the more people shopping, shipping, and storing, generally the more industrial space is needed. Warehouse space in particular is also affected by export and import activity.

The National Association of Industrial & Office Parks (NAIOP) breaks industrial into three categories:

Manufacturing: A facility used for the conversion, fabrication, and/or assembly of raw or partly wrought materials into products/goods. These properties tend to have less than 20% office space and can be further classified for heavy or light industrial use.

Warehouse: A facility primarily used for the storage and/or distribution of materials, goods, and merchandise. These buildings tend to have less than 15% office space, and modern facilities have high, clear ceiling heights that allow for more cubic storage space. This category also may include specialty facilities, such as cold or freezer storage for food.

Flex/R&D: These industrial buildings are designed to give their occupants flexibility in the use of the space. Sometimes referred to as flex/tech space, these buildings are an office-industrial hybrid that can have 30% to even 100% office finish. Many real estate professionals consider data centers to be part of this category.

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