Industrial 101
I know nothing about industrial real estate. Which is funny because I have done some really "off the run stuff" with respect to asset types.
Everyone always tells me industrial is simple, but when it comes time to talk about docking, parking, turning radiuses, power/wattage, clear heights, functionality etc. I know nothing.
Where can I get smart on these? What do you guys look at when evaluating industrial deals and the physical real estate?
I posted this topic below about a year ago. It has some really great info in it:
https://www.wallstreetoasis.com/forums/everything-you-could-ever-want-t…
Industrial is deceptively complicated. Most people who are uneducated on industrial see four walls and a roof. What most don't realize is how important every system and specification is to the functionality of the building, and how they all tie in together. Feel free to ask me any questions. I work on industrial acquisitions all day every day.
Industrial isn't simple, it's CHEAPER to own as TIs are less and leases mostly structured Net. Stable, Core industrial is relatively easy to UW from an investment perspective. And again, Net being preferred among tenants in the space makes most UW easier than working in base years or turning MF units every year.
The space is the most tech forward / evolving sector in CRE from a tenant/development perspective. No beef with the above link, it's great for a baseline understanding - and certainly what most tenants prefer.
It does not, however, tell anything about how tenants have evolved in the last-touch space. You can throw away every guideline in this space, as tenants make it work for location. You should see how shitty some of the buildings were moving with Amazon in them in the urban space.
Prologis has the best research, period. It's also all free/you don't have to log in to get it. They came out with a building classification research brief that gives so much insight into how they look at the space, and it's invaluable. Just read everyone's research, you'll see what they focus on and how they talk about it, and can apply that to what you're seeing.
My link is definitely the base-line info. I’ve yet to find a ‘guide’ that lays out the more advanced details. Outside of the basics, everything else I’ve learned has come from experience and asking people. Good leasing brokers have their finger on the pulse of tenant needs, and are invaluable resources for this kind of information.
One of the problems I’ve found is that tenant needs in industrial are evolving so fast that publications from even 5 years ago are outdated.
When you originally posted that before i downloaded everything, and love it. Don't get me wrong it's great stuff for institutional bulk guidelines, and learning the ins/outs of construction.
Definitely true about keeping up. Hell even Cold Storage is essentially obsolete in what... 10-years MAX. Reasons why industrial aint easy.
logisdics Why do you believe Cold Storage will be obsolete in 10 years?
Not as an asset class, but the changes in design and use make a 10 year old facility a radically different asset from new construction.
What I would recommend doing, that will be better than any link, research, etc. is downloading a few brochures/printing a few building descriptions/photos of some assets nearby (loopnet, Costar, w/e else you have access to), and then just driving to those buildings and getting eyes on the physical description and how it matches up with reality vs. what's on the paper. This will give you a feel for why the buildings have different tenants, what is functional about the buildings, what is not great, etc.
Would say you should do maybe a big box site and multi-tenant business park product as that will give you the two extremes from a use/tenant profile. You probably have some time now anyway assuming you're WFH and no one can do anything. Good excuse to get out of the house for a bit.
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