by 
3rd July 2024
Understanding Industrial Property: Key Types, Benefits, and Investment Insights
What is Industrial Property? And Everything You Must Know
Industrial properties refer to land and buildings utilized for industrial activities. These activities include production, manufacturing, assembly, warehousing, research, light storage, data centers, and distribution.
Types of Industrial Properties
| 1. Flexible Office Spaces |
| 2. Warehouse and Fulfillment Centers |
| 3. Medical Use Laboratories |
| 4. Data Centers |
| 5. Light Manufacturing Facilities |
| 6. Food Manufacturing and Cold Storage Facilities |
Flexible Office Spaces: To encourage innovation and creativity, companies build flexible office spaces suitable for design, research, and co-working. Examples include spaces operated by Regus and WORQ.
Warehouse and Fulfillment Centers: E-commerce has accelerated the transformation of industrial real estate into warehouse and fulfillment centers essential for logistics. Major players like Lazada, Shopee, and Amazon are expanding their fulfillment centers.
Medical Use Laboratories: The pandemic has accelerated the trend of life sciences, leading investors to transform industrial real estate into medical laboratories for healthcare purposes.
Data Centers: With the migration to cloud computing, more data centers are needed. Investors are repurposing industrial properties into data centers.
Light Manufacturing Facilities: Some companies repurpose their warehouses to become light manufacturing facilities for retail and business consumers.
Food Manufacturing and Cold Storage Facilities: Warehouses are being transformed into food manufacturing facilities and temperature-controlled cold storage for distributing food and beverages. Companies like SK Cold Chain Solution, Tasco, HTH Corporation, and Tiong Nam Logistics use industrial real estate for these purposes.
Classification of Industrial Real Estate
Class A Industrial Properties: The newest and best quality properties with top-notch facilities, often located in prime locations. Highly sought after by e-commerce giants.
Class B Industrial Properties: These properties may look a bit run down but are well-maintained. Located in second-tier or third-tier markets, they can be valuable if situated strategically.
Class C Industrial Properties: Typically over 20 years old and in need of renovation or redevelopment. These properties might not be in desirable locations.
According to PROLOGIS, industrial property is also divided into three types: Manufacturing, Storage & Distribution, and Flexspace.
Advantages and Disadvantages of Industrial Properties
Advantages:
- Strategic Location and Accessibility: Proximity to seaports and logistics hubs.
- Steady Income from Long-term Tenants: Lease tenures typically range from 3-5 years, sometimes even longer, providing minimal income fluctuation.
Disadvantages:
- Difficulty in Finding New Tenants: Specialized warehouses or properties might be hard to lease out when the original tenant leaves.
- Varying Demand: Not all industrial asset classes are in demand. Poorly designed or poorly located properties can lead to financial losses.
What Can My Industrial Specialist Do for You?
We offer insights and support to achieve your investment objectives by helping you discover value investments or assets. We help you rethink everything from location, pricing, and value creation of investment opportunities or new operations. Our industrial estate agents personalize solutions to meet your business needs. Reach out to us at https://myindustrialspecialist.com.
For more information on industrial properties and the latest market trends, follow our website, MyIndustrialSpecialist.com, for comprehensive insights and updates.
