The surge isn commercial warehouse space demand

16 Replies

Curious to find out if anyone has in depth experience in the commercial warehouse market. Lots of recent articles and real estate analysts have pointed to the growing demand over the next several years in this area. Seems to make logical sense. Anyone have a good case study or story? 

   @Brian M Sweeney   I am in the commercial/industrial space in PA. The industrial sector, specifically warehouse has been on the rise for a number of year with cap rates starting to compress. This is mostly due to the rise in e-commerce and hence the need for warehouse and distribution centers. To add, there is some evolutionary trends being forged by Amazon such as "nano" warehousing that is creating demand for new space. However, post Covid-19, the spike in industrial is due to the increase in the consumption of consumer staples, and in truth industrial is suffering a two-pronged situation similar to Retail. In my area, there are many Industrial tenants seeking lease restructure. This is the contrast between the 30,000 foot view of the sector. As for a short story, a team of five brokers that I know personally just closed on a 132,000 sf warehouse in Denver, PA... (during the pandemic)

I own several "flex space" buildings where there is a small office area with the rest being warehouse. It is in very high demand and lease rates keep going up. Companies are having to build their warehouses because the supply is so low. Further raising the prices. I am in Syracuse NY, Amazon just broke ground on a 3 Million SQFT warehouse here which will bring even more distributors to the area. As retail giants move to online sales they still need warehouses for inventory. I basically use the BRRRR strategy but with warehouses. It is a very interesting market.

Originally posted by @Brian M Sweeney :

Curious to find out if anyone has in depth experience in the commercial warehouse market. Lots of recent articles and real estate analysts have pointed to the growing demand over the next several years in this area. Seems to make logical sense. Anyone have a good case study or story? 

This and will continue to be a very resilient space. use like other types of commercial it is location specific. Third party logistics and last mile distribution centers are a great space to be in right now. Most ports and inland port areas are expanding and adding space. You really need to understand the markets and demand for space as things are shifting rapidly in this sector.

 

I only invest in warehouse. We are very strong in DFW no one is building less than 200k sq ft new. Demand for sub spaces keeps going up. My client also buy a lot of this as well.

Originally posted by @Zach Quick :

@Ronald Rohde What's your bread and butter puchase look like? I think if I ever veered that's what attracts me.

 Single tenant, 50k sq ft warehouse, clear height of 20+, dated exterior and office. Tenant will renew but only if certain repairs are made. Seller doesn't want to repair, so we purchase and become a good landlord. Trades and commerce are main industries located near highways, doesn't have to be in a complex.

We will buy anything that is a 6 (maybe 7 now) cap rate meeting those criteria. Cash flow well at 9%+, long term hold...

I work primarily with Industrial and Office in MSP Market. Good demand factors for industrial pushing pre-covid into current environment. Being in the midwest this may relate, we are still seeing high asks, low vacancy, long terms. Big, medium, small players still looking for excess room. E-Commerce definitely helps while riding the coat tails of Amazon.

I only invest in warehouse buildings. 10,000-25,000sqft. 1K-2K in office space with the remaining in warehouse space and some dock doors. Great for the light manufacturer or service provider. I'm currently developing in Huntsville Alabama which has many different industries. These type buildings are in short supply and rents keep going up! Looking to expand to other areas in the future as, I have an unfair advantage in that my family owns a metal building manufacturing company.