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Investing in industrial real estate

On Behalf of | May 25, 2018 | Commercial Real Estate

Investment in industrial real estate, especially warehouses, is at its highest level in more than a decade. The sector is doing well in a world where consumers expect delivery of goods faster, which requires large facilities in dense urban environments. Since industrial properties in Missouri are usually less expensive than their residential counterparts, they can potentially provide investors with a greater return on investment.

Even though this opportunity can seem very attractive, it’s crucial for potential investors to tread carefully into the market. The design of an industrial building has a major impact on the types of tenants to whom the investor can rent. That’s why some experts recommend new construction projects, where the optimal design can be determined ahead of time. For example, a centralized location in a region may be perfect for a distribution building with a large warehouse and small office.

The vacancy rate of any given area can also impact the potential for return on a piece of property. A building left without a tenant can be a major drain on an investment’s cash holdings, especially if the building is particularly large and has significant property taxes. Areas with access to airports, rail, harbors, and other forms of transportation tend to attract business and have lower vacancies.

A wide range of local, state and federal regulations can impact an investor’s ability to see a return on his or her industrial building investment. Law firms that focus on commercial real estate keep up to date with all current laws and enforcement priorities. An investor is likely to have a bigger chance of success when they partner with an attorney who can be his or her advocate.