Why Industrial and Warehouse Developments Should Be on Investors’ Minds

Warehouses and industrial spaces offer so many possibilities and are some of the best investment opportunities around South Florida.

The Urban Land Institute listed “industrials” as a top prospect for investment and development in the commercial property sector in 2016.  One of the drivers is the increasing need for server farms and e-commerce distribution centers.

Amazon recently announced plans for a second distribution and fulfillment center in South Florida. It will be housed in a nearly 118,000-square-foot refurbished warehouse near Miami International Airport.  In 2015, the company opened a 335,841-square-foot warehouse and distribution center in Doral, in western Miami-Dade County.

While you shouldn’t invest because of one company, you should look for trends like this. And Doral is becoming an international hub for distributors of all kinds. Because of this, industrial spaces in South Florida should be on the minds of any commercial real estate developers.

Why Warehouses? 

Investing in industrial spaces may not seem as glamorous as other types of real estate, like beautiful condos or high rises. But, industrial real estate provides practical and efficient space that can be built out to serve any function.

Warehouses and other industrial buildings can be suitable for a variety uses, including manufacturing, research and development, storage, and distribution of goods.

As a bonus: these types of properties are often priced at 30% to 40% lower than the peak of the market.  The National Council of Real Estate Investment Fiduciaries Index shows that returns on investment for industrial properties over the past 20 years has reached 10.6%, slightly more than the average ROI for all property types at 10.2%.

The Industrial Prospect 

Several factors are driving the demand for industrial spaces and prompting investors to take notice. Amazon has demonstrated the dramatic changes occurring in the retail industry when it comes to logistics. Many large corporations are seeking multiple smaller-scale spaces in urban and suburban areas.

E-commerce has shifted customer behaviors, requiring companies to offer services like same-day delivery. This is fueling the industrial real estate development sector, as companies look to build distribution and fulfillment centers in places with large populations and near transportation hubs, such as major highways and interstates, ports, air, and rail.

Investors and developers also often work closely with local municipalities to negotiating incentives that may influence the location of the development. Some industries may be eligible or big tax benefits, rebates, low-cost loans, and other incentives.

If industrial developments are on your mind and you’re considering an investment opportunity in South Florida, let us help. Give us a call to set up a consultation.

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