Types of Industrial Real Estate

Industrial land is land that is zoned industrially, but does not have any permanent structure on its premises. A site like this doesn’t always have to have a building on its grounds in order for an industrial business to operate. The land may be used for purposes such as parking equipment, storing gravel or mulch, etc. Investing in industrial land also gives you the opportunity of building from the ground up. Vacancy rates in the Industrial sector of commercial real estate have been historically low, so building a structure on your industrial site carries a much lower risk. Owning industrial land allows investors multiple routes for high yield returns, such as selling the space as an industrial build-to-suit property.

You may have seen a sign on a piece of land before that says “build to suit.” A build to suit is an advertisement to businesses who may be looking for space for their company. In a build to suit, a landowner pays for the construction of a structure according to the tenant’s specifications and then leases that building to the tenant once the building is delivered. Build to suit options can be great for industrial land owners because you don’t have to worry about the building sitting empty, as a lease has already been secured with the company who contracted the investor to build the structure. This type of industrial real estate investment presents less risk than building a “speculative building,” which is constructing a building with the intention to immediately sell it. However, “spec buildings”, can add great value to the land. For example, general warehouse space is a hot commodity in industrial real estate markets and allows you to meet demand by delivering a brand new warehouse to the market.

Cold storage and refrigeration warehousing is refrigerated warehousing intended to store perishable food and products. Cold storage is often used as distribution centers for chain groceries and require HVAC systems and insulation setups that are able to support and maintain temperatures ranging between 34 degrees to -10 degrees. Increases in consumer demand for fresher food and grocery delivery, cold storage has increased significantly since 2000. Similar to heavy manufacturing sites, these spaces are build out intensive and tenant retention can be very high.

Data Centers are very complex properties usually in centralized locations that are typically equipped with computer systems and networking equipment. Data centers provide important services such as data storage, backup and recovery, data management and networking. These centers do things like run Web sites, e-mail, and instant messaging (IM) services, provide cloud storage and applications, and help perform other duties that require computer processing. The demand for data centers is only increasing as more businesses are requiring access to their own data center or access to someone else’s. Because of the large amount of high-tech, specialized equipment that these centers use, the electric and power systems that run these buildings are extremely complicated and expensive, which makes new construction of these sites very costly.