And why industrial real estate can be a superior investment
When I tell people that I invest in industrial real estate, I can almost guarantee that they’ll respond with, “Oh, yes. shops and offices.” But that’s not what I mean by industrial real estate.
Industrial = industry
Industrial real estate refers to factories and warehouses. In contrast, commercial real estate refers to sites of commerce, namely shops and offices. An easy way to think about it is if you are retailing a product or service directly to the public, you’d have a commercial business. Conversely, if you were a wholesaler, manufacturer or supplier of a product to a retailer, then your business would be industrial.
When it comes to property, if the public are able to freely access the buildings, then it is probably a retail or commercial real estate site. Of course, the lines can be blurred, especially with outlet shopping and non-traditional businesses like gymnasiums for example setting up in warehouses, but generally speaking the public is not wandering around industrial manufacturing sites.
The core types of industrial property
Industrial real estate typically falls into one of four groups:
– Standalone: a single use building
– Strata title: two or more units grouped together with common-use areas, like car parking
– Industrial parks
– Distribution centres
Furthermore, industrial property has two zoning categories. Buildings zoned Industrial 1 (in NSW) are for toxic material manufacturing and special use – which is determined by the local council. Buildings zoned Industrial 2 are for light manufacturing and warehouses – this is the type of industrial property that I personally invest in and recommend as a source of passive income.
Industrial property has diverse uses
You’d be amazed at the types of businesses that operate from industrial real estate. Some of the businesses that leaseindustrial properties include:
– Suppliers of truck engine parts
– Building services companies
– Places of worship
– Martial arts clubs and dance studios
– Kitchen appliance showroom
– A piano restorer and tuner
– Film prop designers
– Formal wear and party hire businesses
So while industrial property might initially seem daunting, you can see that the businesses using these factories and warehouses are just every day businesses. And with the growing online retailing revolution, there is an increasing need for businesses to have warehouse space to manage the logistics of storing and distributing goods. Low vacancy rates: While you might regularly see empty shops and offices in shopping centres and office blocks, industrial property has low vacancy rates and demand currently exceeds supply, resulting in strong rental income.
Are you interested to find out more about investing in industrial property?
Money Factory Investing runs workshops especially for women just like you to find out more about investing in industrial property. We’ll answer all your questions – no matter how big or small – and provide you with a blueprint for how to develop an industrial property investment strategy and how to get the right advice so you can invest with confidence. You’ll leave the seminar with the knowledge of what support you’ll need and the questions you should ask of real estate agents, lawyers, property managers, tenants and more.