The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
The greatest benefit that comes along with investing in industrial real estate or distribution centers is that the spaces are incredibly versatile. They’re large boxes, they don’t come along with the complications of multi-family or office settings, and they can be used for just about anything from a recreation center, to sales, to storage. These properties are highly re-leasable, leaving investors and owners confident they can always find a new renter for their buildings.
Richard Wilson: Okay, what are the investment risks or benefits of investing in industrial real estate or distribution centers?
Robert Borris: Well, the benefits – there’s a number of real benefits. Number one industrial real estate is relatively easy to manage. Unlike multi-family, you don’t have day to day tenant issues like the water doesn’t work or the toilets don’t flush, or whatever. Unlike office buildings you don’t normally have elevators to deal with and complicated HVAC systems, so the real estate is pretty simple, pretty basic. The other benefits are it’s – since they’re basically big boxes, you want it as much of a box as you possibly can get, it’s kind of like owning a shoebox. People don’t throw away shoeboxes, because they’re kind of practical. So, there’s lots of flexibility, you can do lots of stuff in the building as I mentioned the batting cages I just leased 40,000 square feet to, the guy down the other end of the building sells commercial air conditioners. I mean, the diversification is really key and really the benefit. And being able to re-lease things to a variety of users is important, too. So you’re not stuck with a building you can’t rent. And the other good thing is generally speaking the rents escalate with inflation, it’s a great hedge against inflation. Buildings are highly financeable and it’s simple, I mean it’s not real complicated.
Richard: Right. Great.