Switch to Industrial RE
My company announced a new area of real estate we will be investing in - Industrial, with a focus on distribution centers with single tenant leases in place. 100% of my experience is in MF so I have practically no knowledge of the industrial segment. My question is what are the best educational resources available to bring me up to speed? How will modeling differ besides Argus? Has anyone here made the switch from residential to industrial? What'd you like/dislike? How would you compare the two?
Greystar ?
Go to adventures in cre and review all of their industrial models.
Industrial is like 90% NNN leased. should be very straightforward
I made the pivot. Worked in MF AM, current role is in Industrial Acquisitions.
Not sure I have any resources to recommend, most of my knowledge just came from on the job learning past few years.
I frankly found multifamily a bit boring but that was probably due to being on the AM side of things. Industrial can be pretty interesting, you get to see a wide variety of businesses and some of them will blow your mind. Recently did a tour where some guys had a giant silo on the property that had rice husks in it, they were converting rice husks into cutting tools. Granted that will generally be on the manufacturing/light assembly side of things, warehouses probably won't be the most exciting to tour.
Unless you are buying Class A Big Box, there is definitely more complexity than initially meets the eye.
Some things to be mindful of:
There's a lot more I could touch on but I'll leave it there for now. Market is hot but still some opportunity to make money unless you are just allocating to brand new Class A product.
Thank you. This is very helpful. I think it might be something like Class A big box centers w/ big name tenants. What are cap rate and returns like for those assets? Also, what are debt terms like? Term, IO, LTV, rate/spread, etc.?
Knowing my principals they will likely want to model long hold periods (>10 years) with a refi down the line and I am worried about getting the capex/TIs modeled reasonably correct in the outer years
As of last year sub-3 and 3% I/O with 3-5 year terms
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