Investing in Industrial Real Estate

When investing in industrial real estate like industrial real estate law Long Island, many options are available to investors. These types are manufacturing, light manufacturing, R&D, and biotech. If you’re unsure which kind of property suits your needs, consider reading this article. You may find it helpful to know what to look for when investing in industrial real estate. You might even find a new way to make your money work harder.

Manufacturing

Heavy manufacturing is an essential type of commercial property located in the industrial areas of municipalities. These properties often contain heavy machinery, chemicals, and power. Some of the biggest names in heavy manufacturing include General Motors and DuPont. Owners of heavy industrial properties are typically national companies, but some are small local owner-users. Heavy manufacturing properties typically have long leases, with tenants in place for decades. There are many advantages to owning such a property, including the ability to use it for any purpose.

The second most common type of industrial property is manufacturing buildings. These buildings are typically box-shaped and feature ceilings of 16 to 80 feet. They typically contain 3,000 to 15,000 square feet of space per dock. These buildings suit any manufacturing business, from small bespoke artisans to large international corporations. For a successful lease, you must identify which business class best suits your needs. A manufacturing building should be large enough to accommodate your company’s production needs and should not contain more than 20 percent office space.

Light manufacturing

In general, light manufacturing properties are more miniature than heavy manufacturing properties. These businesses produce smaller parts with lighter equipment, ship their products, and are not as heavily invested in space as heavy manufacturing companies. On the other hand, distribution warehouses are larger but not as highly specialized. As a result, they have a lower door to square footage ratio and are usually used for storage, not manufacturing. But light manufacturing properties are still valuable because they can be highly adaptable to tenant needs.

Unlike their corporate cousins, light industrial properties are typically single-story buildings with less than 50,000 square feet of floor space. Light industrial facilities are more flexible than larger commercial properties, making them great for many businesses. Light industrial properties often serve as base operations for multiple companies, and they are usually located near residential areas. Many cities limit the height and number of units in light industrial properties to avoid displacing residential areas.

R&D

An R&D industrial property is a special commercial property used by companies to create or enhance products. These properties typically contain specialized space, such as clean rooms, open square footage, and light manufacturing areas. The products stored within the space are not for sale and are used for testing. These properties are typically located in campus-like industrial parks. They require specialized plumbing, water distribution systems, and temperature and humidity controls.

This kind of property often serves several purposes. First, it is often considered the bridge between office and industrial real estate. A typical R&D/flex facility will have a minimum office build-out of 25 percent, with the remainder used for light manufacturing, specialized labs, or warehouse/distribution spaces. Flex space is generally designed to be flexible and can vary depending on the tenants’ needs. R&D/flex properties often have the flexibility to be leased for various purposes.

Biotech

The industry is growing quickly, and biotech real estate is in high demand. Its strong fundamentals, low vacancy rates, and keen investor interest make it an attractive investment. Rents are rising quickly, and triple-net lease rents can easily reach $6 per square foot. In addition, the low cap rate and relatively small size make it ideal for institutional investors who wish to build relationships with operators. And as the industry expands, so will the number of available properties.

While many factors drive biotech space demand, government funding is a primary driver. In the US, the National Institutes of Health announced a 3 percent increase in its budget for 2021. Cushman & Wakefield reported that life sciences capital hit a record high of $70 billion in North America in 2018.