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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, 2023)
Industrial & Warehouse Trends
Commercial Market Insights (National Association of REALTORS®, Sep. 2024)
“The industrial sector continued to lose momentum in August. Net absorption was nearly 70 percentage points lower than a year ago, while rent growth decelerated significantly, dropping to 3.2% from 8.0%. With additional new supply, the vacancy rate rose 6.6% from 5.1%. However, further declines in inflation and interest rates in the coming months may boost demand for goods. This usually creates a ripple effect, increasing the need for industrial spaces to manage production, storage, and distribution.”
Industrial Space Demand Forecast, Third Quarter 2024 (NAIOP, Aug. 2024)
“Total U.S. industrial net absorption in the first half of 2024 totaled 67.1 million square feet, down substantially from a historic peak in absorption in 2021, when it totaled 749.3 million square feet for the year, according to historical data provided by CoStar. However, despite increased uncertainty about the economic outlook for the second half of 2024, the current NAIOP Industrial Space Demand Forecast projects that the national industrial real estate market will continue the trend of positive net absorption for the foreseeable future…This forecast assumes a “soft landing” as defined by a gradual lowering of interest rates as inflation falls without any significant harm to employment or a macroeconomic recession. If a “hard landing” materializes, industrial net absorption could significantly underperform the forecast. Given recent volatility shocks in equity markets and mixed employment data, the possibility of a hard landing (i.e., a recession) appears higher than was the case at the beginning of the year.”
Manufacturing a Return (Society of Industrial and Office REALTORS®, 2024)
“With the resurgence of onshoring, combined with legislative measures such as the Infrastructure Investment and Jobs Act (IIJA), Inflation Reduction Act (IRA), and the CHIPS Act, all aimed at tackling supply chain challenges, there has been an explosion in manufacturing construction. Real manufacturing construction spending doubled from the end of 2021 to Q2 2023, according to a report by the U.S. Treasury Department, and construction spending on computer, electronics, and electrical manufacturing (a small share of manufacturing construction over the past few decades, but now a dominant component) has nearly quadrupled.”
Multistory Warehouses Usher in New Era of Urban Logistics (Globe St., Oct. 11, 2023)
Tentative steps to revolutionize the way warehouses are conceived and designed are being made in the United States. No longer do they need to be gigantic spaces on a single floor. Instead, they could be multistory structures with docks on more than one level…Multistory warehouses have been used in Asia for more than two decades, and a few such structures are also to be found in Europe…While the U.S. multistory and urban logistics landscape is currently very much in its infancy, there is tremendous potential in the future of multistory and urban logistics in both the established urban logistics markets and emerging logistics markets.”
What Could You Create?: Commercial Brokers Bring Their Imagination and Market Savvy to Bear in Finding New Uses for Existing Buildings (REALTOR® Magazine, Sep. 20, 2022)
“Churches turned into art centers, factories into microbrew pubs, and shopping malls into medical facilities are just a few examples of adaptive reuse, the term used to describe the repurposing and transformation of an existing structure. While adaptive reuse is not new, changing business and social factors are driving renewed interest. These factors include a hybrid workforce, supply chain disruptions, increased interest in green construction and a lack of affordable housing. The result: more opportunities for commercial real estate brokers to think differently about the highest and best use of a property.”
Industrial & Warehouse Investment
Industrial REITs (NAREIT, Sep. 30, 2024)
“Industrial REITs own and manage industrial facilities and rent space in those properties to tenants. Some industrial REITs focus on specific types of properties, such as warehouses and distribution centers. Industrial REITs play an important part in e-commerce and are helping to meet the rapid delivery demand. Nearly 145 million Americans live in households that invest in REITs. With their historically competitive total returns and comparatively low correlation with other assets make them an attractive addition and diversifier for many Americans’ portfolios.”
Homeward Bound: Reshoring Manufacturing Jobs Brings New Opportunities, But Also Challenges for Industrial Specialists (CREate, Mar. 22, 2023)
More than half of American CEOs (55%) whose companies rely on manufacturing to produce and deliver their products recently reported plans to reshore some operations…As industries compete for industrial space, the high cost and lack of ready-to-build land make older existing facilities more attractive…Commercial brokers who understand the complexities of reshoring and can cultivate relationships with others in the reshoring ecosystem stand to benefit. In addition to economic development agencies, explore opportunities to connect with the global market through foreign consulates, trade offices, world trade centers, and international property shows.”
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
eBooks.realtor.org
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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