A Flex-ible Real Estate Investment . . . The Trend Towards Increased Warehousing

by | BiggerPockets.com

There are several trends I’ve seen emerging. One has to do with cyber-shopping — online buying seems to be a trend that will only increase. Nothing is ever certain in our fast-changing world, but the convenience of cyber-shopping seems to have taken hold as consumers gradually get over the distrust of online buying and break their dependency of mall addiction.

From recent observation I’d say the mall addiction hasn’t been altered drastically, but common sense tells me more and more people will be shopping online. This doesn’t mean products will be magically transported from the screen to the consumer’s homes, it means there will be more and more need for storage — something physical an investor might take note of. It’s funny sometimes how the new technology continues to depend on the structure of the old, but land, space and buildings will always be needed no matter how technologically advanced the forms of buying and selling become. There may be less department stores and more office/warehouses, but there will something that exists that has to do with real estate.

Another trend that goes along with needed space for online businesses to store and ship their products is decentralization of industry. Many small companies, high-tech and low-tech, are spreading out all over the country. A wise investor might want to analyze these two trends in their area to determine if there is a shortage of flex space and a growing demand for such space.

Many small businesses will find certain areas around the country appealing when they begin comparing labor costs, leasing costs, cost of living, taxes and such. For the investor he/she might find flex space a good investment that requires less expensive construction costs than other investments (hi-tech or bio-tech would have construction needs that are a little more costly, of course) that require building anew — and if there is a shortage of flex space, the investor might be able to lease at a healthy rate still attractive to businesses relocating from areas where land cost, construction costs and other costs of doing business are higher.

A little snooping around the city development department could reveal an increase in interest from small businesseses with flex space needs. If the trends I indicated above are growing as I suspect they are, in many areas around the country there will be a demand looking for a supply. It would be good to start on the ground floor of such an opportunity than to be the last when your area is glutted like has happened to many investors in larger areas.

It seems to me the need for storage and shipping will grow tremendously if small companies increase and spread out as the result of online buying and decentralization. It’s certainly something to consider and investigate.

Happy investing!

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  1. When a borrower gets “into my web”, by closing a loan transaction, I conduct periodic mortgage reviews. Jillayne Schlicke once commented that the periodic review is just an excuse to “sell a refinance”. My response is a bawld one: “Well, Duh!“. We should ALWAYS be looking for an excuse to refinance the borrower’s loan…IF…there is a tangible net benefit to the borrower AND I get paid. Call that the way of the trader. Traders look for opportunities to profit off market fluctuations.

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