How to understand Industrial

Looking to understand what makes a good deal, or really a deal at all. I have been in the mixed use/multi space and when talking to friends about industrial, all the lingo is throwing me off. Door heights, loading bays, clear span, it's all very foreign to me. 

Any good resource/white paper I can read up on so it starts to make sense? 

Thanks in advance!


Based on the most helpful WSO content, diving into the world of industrial real estate requires a solid grasp of several key physical and operational characteristics that define the value and functionality of these properties. Here's a breakdown to help you start making sense of it all:

  1. Ceiling Heights (Clear Height): This refers to the usable height to which goods can be stored. The standard for a Class-A bulk building is at least 32' clear, with a preference for 36'-40' clear. For shallow bay buildings, 24'-28' clear is acceptable, but 28' clear is preferred. Regional distribution centers often look for 28'-32' clear. The clear height is crucial because it affects how much can be stored and, therefore, the building's efficiency and value.

  2. Loading Bays/Docks: These are the areas where trucks load and unload goods. The number, type (e.g., dock-high, grade-level), and configuration of loading docks are important for accommodating different types of vehicles and ensuring efficient movement of goods.

  3. Clear Span: This term refers to the space between the structural columns within the building. Larger clear spans mean fewer columns and more usable space, which is particularly important for maneuvering large equipment or storing bulky items.

  4. Truck Court Depths: The space available for trucks to maneuver while loading or unloading is critical. A depth of 180' plus is becoming standard, allowing for adequate space for trucks to back up to docks and for other vehicles to pass.

  5. Functionalities like Car Parking and Proximity to Freeways/Highways: These factors play a significant role in the desirability of an industrial property. Adequate parking for employees and proximity to major transportation routes can significantly impact operational efficiency.

  6. Tax Abatements: This can be a driver in rental rates between buildings. Properties with tax abatements can offer more competitive rates or equally competitive rates with better margins.

For a comprehensive understanding, the WSO forum post titled "Everything You Could Ever Want to Know About the Property Characteristics of Warehouse/Distribution Buildings" is an excellent resource. It covers almost all the information you could ever want about industrial properties, including the aspects mentioned above. This should serve as a solid foundation for understanding what makes a good industrial deal and help demystify the lingo that's been throwing you off.

Sources: Industrial Properties - What are the key things to know?, Industrial 101,, Everything You Could Ever Want to Know About the Property Characteristics of Warehouse/Distribution Buildings

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Looking to understand what makes a good deal

Fundamentally industrial is just like any other real estate class, you want to earn some return on your money in the form of rent. The cap rate will reflect the riskiness of the asset due to its idiosyncratic, market and class risk. 

The asset specific features you listed you can understand through google, but just remember that they are simply features of the building and are only relevant insofar as the tenant is interested in them. For the three you mentioned:

  • Door heights - Literally how tall are the doors. It matters if you're trying to get a forklift in or other large equipment, different tenants will have different requirements so a smaller door height can limit your potential tenants. 
  • Loading bays - How many bays that accept trailers to back up and load/unload from. More bays means more flexibility on the inside, if you have a narrow rectangle and bays all along the long side you can subdivide the space and every tenant gets their own bays, if you only have a few on the short side your options are more limited. Even if you have a single tenant, more bays can be more useful since it can ease the logistics of loading/unloading internally. Again, affects who your tenants will be and their willingness to pay. 
  • Clear span - (give me some leash because I'm actually a MF developer so I'm kinda taking an educated guess here) I'm pretty sure this is the span between structural elements that support the roof, think of it like column widths in an office building. I think it's where you want specific widths to match prefabricated shelving units that industrial tenants use (similar to lab space where you want to line up your columns to match the standard lab bench dimensions). 

Hope that helps, and anyone who is actually an industrial guy please feel free to correct me. 


Understanding what makes a good industrial deal is likely stuff you already know about (valuations, debt, cap rates, etc.). Understanding the buildings will take some time but I would recommend first working out what kind of different businesses need industrial space. From their, you'll gain an understanding of where they want to be (close to core, industrial business park, middle of nowhere) and why, plus what buildings and/or features they'd like (clear height, loading bays, power, etc.)

eg. Brewery vs. Amazon warehouse vs. tile distribution vs. lightbulb manufacturer, and so on


Industrial is definitely more tenant focused as far as putting together the specs for a building and/or site. There is not a one size fits all solution. Even the site paving, or lack of, can be a big differentiator. Parking delivery vans on a site requires a lesser stabilized surface condition than stacking full-weight containers across a site with a loader.

That being said, you will see cross-dock hubs and basic distribution warehouses have more common, repeatable specs.


Are you talking about acquisitions or ground-up new industrial development? If the latter, you will need to learn as much as you can about site work, since the site work tends to more intense and complex than on other asset types due to the scale of the building footprints and impervious surfaces. People talk about how simple industrial buildings are (which is often true, but sometimes not depending on what kind of TI you end up doing) but people underestimate the complexity of the site component on these projects.


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