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Types of Warehouses
Warehouses are the most common types of storage, however other forms do exist (i.e., storage tanks, computer server farms, etc.). Some warehouses are massive structures that simultaneously support the unloading of numerous in-bound trucks and railroad cars containing suppliers' products while at the same time loading multiple trucks for shipment to customers. Here we look at five different types of warehouses:
- Private Warehouse: Owned and operated by channel suppliers and resellers and used in their own distribution activity.
- Public Warehouse: Space that can be leased to solve short-term distribution needs.
- Automated Warehouse: Advances in computer and robotics technology have enabled many warehouses to feature automated capabilities.
- Climate-Controlled Warehouse: Space that is capable of storing many types of products including those that need special handling conditions.
- Distribution Center: Warehouses where product storage is considered a very temporary activity.
Source: Types of Warehouses (KnowThis, 2019)
Industrial & Warehouse Trends
Industrial Sector Fundamentals Remain the Strongest (National Association of REALTORS® Economists’ Outlook, Sep. 29, 2021)
“From 2020 Q2 through September 28, 2021, more than 518 million square feet of industrial space has been absorbed by the market (positive net absorption), according to CoStar® market data. Of the 518 million square feet, the majority, 94% or 486 million square feet, is comprised of logistic space. The industrial vacancy rate has decreased to 4.6% (5.3% in Q1 2020) as downward pressure is largely due to more demand for quality industrial space than supply can manage, which is a result of the acceleration of e-commerce.”
Industrial Demand Will Continue to Boom Through 2026 (Globe St., Sep. 28, 2021)
“Over the last few years, bolstered by an unprecedented boom in e-commerce and retail sales, the industrial sector has posted historically high demand and supply growth. And that’s led some analysts to question how long the ride can last for the sector that’s relatively unaccustomed to such a meteoric rise. In short, some are wondering whether the current boom is a bubble or something more sustainable.”
Commercial Market Insights (National Association of REALTORS®, Sep. 2021)
“Amid an improving economy, the demand for commercial real estate continues to recover, but the recovery is uneven across property types and geographic markets. There is strong recovery in the multifamily, industrial, and retail property markets, while the recovery has not been as robust in the office and hotel property markets. High transmission of delta variant cases in 97% of counties has held back the return of workers to the office and business and recreational travel.”
Industrial Space Demand Forecast, Third Quarter 2021 (NAIOP, Aug. 2021)
“Demand for industrial real estate continues to be strong as the long-term trend toward e-commerce (and away from in-store sales) continues with no end in sight. With nearly 100 million new square feet delivered nationally since the beginning of the year, 450 million square feet currently under construction and another 450 million planned, the demand for industrial real estate still outpaces supply.
Because of this, authors Dr. Hany Guirguis and Dr. Michael Seiler forecast that total net absorption in the second half of 2021 will be 162.6 million square feet with a quarterly average of 81.3 million square feet. In 2022, the projected net absorption is 334.6 million square feet with a quarterly average of 83.6 million square feet.”
Latest Trends in the Industrial Real Estate Sector Here to Stay (Area Development, Jun. 2021)
“Prior to the onset of the coronavirus, the increase in online sales was driving growth in the industrial real estate sector. JLL found that nearly 35 percent of all industrial leasing was attributed to e-commerce pre-pandemic. After March 2020, as online sales experienced an explosion in growth, demand for distribution space skyrocketed, accounting for the majority of all industrial leasing in 2020 — Amazon alone represented 55 percent of total U.S. industrial absorption. The result? A flood of investment dollars into the industrial real estate sector — the infrastructure (i.e., warehouses) needed to build out the same-day/next-day e-commerce network is not dissimilar to the railroad industry in the late 19th century.”
Adaptive Reuse is the Future of Commercial Real Estate (Commercial Observer, Oct. 19, 2020)
“Adapting and repurposing commercial real estate assets to suit new and different needs will be the core focus for investors, owners and operators in the months and years to come. This shift will require visionary thinking and strategic, opportunistic capital investment. [This article contains] insights into how some of the biggest names in the industry are seizing upon this opportunity to transform the commercial real estate landscape and reshape it to their advantage.”
Industrial & Warehouse Investment
Here’s Why Warehouses Will be a Good Investment in the Near Future (Million Acres, Jun 29, 2021)
“Many retailers that were struggling before the pandemic, or were hurt by it, are seeking to shift from physical stores to online sales in the near future. Doing so makes a lot of financial sense. It's more cost-effective to fulfill and ship online orders than to cover the expenses associated with maintaining physical locations, like rent, insurance, and employee wages. But this rapidly evolving shift to e-commerce is apt to spark an uptick in warehouse demand. After all, retailers will need a home for their inventory once they stop maintaining physical stores, and warehouses fill that need. And that's something real estate investors should really line up to capitalize on, especially given shopping malls' precarious future.”
Brokers Readjust their Thinking in a Post-Pandemic Market (Society of Industrial REALTORS®, Summer 2021)
“Office and industrial properties present a tale of two markets, post-pandemic. On the one hand, the industrial sector has exploded, as providers of product continue to ensure that grocery shelves remain stocked while keeping pace with the accelerated demands of e-commerce. On the other hand, the pandemic is forcing office occupiers to pause and rethink their space needs, even to the point of downsizing to the relatively open spaces of the suburbs with renewed interest.”
How to Approach an Investment in Industrial Property (JLL, Sep. 25, 2020)
“Industrial real estate can include warehouses, factories, depots, and storage facilities, and is often inexpensive to own and operate. It typically provides stable cash flow with long-term tenancies. So, how should you approach an investment in industrial property? As with any investment, it’s important to conduct careful research and be fully aware of the risks associated. While there are many benefits to owning industrial property, it can be a major financial burden if not investigated properly beforehand. With that in mind, [here are some] steps you should take before investing in industrial real estate.”
eBooks & Other Resources
The following eBooks and digital audiobooks are available to NAR members:
Commercial Real Estate Investing 12 Easy Steps to Getting Started (eBook)
Commercial Real Estate Investing – A Creative Guide to Successfully Making Money (eBook)
The Commercial Real Estate Revolution (eBook)
The Complete Guide to Real Estate Finance for Investment Properties (eBook)
A Master Guide to Income Property Brokerage – Boost Your Income By Selling Commercial and Income Properties (eBook)
Successful Real Estate Investing — How to Avoid the 75 Costly Mistakes Every Investor Makes (eBook)
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