Buy industrial in a downturn
Precedent indicates that industrial rents and industrial values are the least volatile among all the major commercial property types. A look a current circumstances verifies this: retail is taking the the biggest hit with millions of feet of negative net absorption. Office is generally falling out of favor as well. Industrial rents in the DC area for instance are off slightly - generally 10 percent give or take - but the warehouse fundamentals are reasonably sound.
As an investment class, it’s best to focus on small bay, multi tenant industrial product with ample truck courts and desirable locations with easy access to road networks. This product compares favorable to “big box” distribution product which is more sensitive to swings in the economy: with less product to distribute to consumers, there’s less demand for distribution space. The small bay space, full of plumbers and electricians and the like that generally manage to hang on through these sorts of downturns.
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Tags: warehouse
