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Types of Warehouses
Warehouses are the most common types of storage, however other forms do exist (i.e., storage tanks, computer server farms, etc.). Some warehouses are massive structures that simultaneously support the unloading of numerous in-bound trucks and railroad cars containing suppliers' products while at the same time loading multiple trucks for shipment to customers. Here we look at five different types of warehouses:
- Private Warehouse: Owned and operated by channel suppliers and resellers and used in their own distribution activity.
- Public Warehouse: Space that can be leased to solve short-term distribution needs.
- Automated Warehouse: Advances in computer and robotics technology have enabled many warehouses to feature automated capabilities.
- Climate-Controlled Warehouse: Space that is capable of storing many types of products including those that need special handling conditions.
- Distribution Center: Warehouses where product storage is considered a very temporary activity.
Source: Types of Warehouses (KnowThis, 2023)
Industrial & Warehouse Trends
Multistory Warehouses Usher in New Era of Urban Logistics (Globe St., Oct. 11, 2023)
Tentative steps to revolutionize the way warehouses are conceived and designed are being made in the United States. No longer do they need to be gigantic spaces on a single floor. Instead, they could be multistory structures with docks on more than one level…Multistory warehouses have been used in Asia for more than two decades, and a few such structures are also to be found in Europe…While the U.S. multistory and urban logistics landscape is currently very much in its infancy, there is tremendous potential in the future of multistory and urban logistics in both the established urban logistics markets and emerging logistics markets.”
Commercial Market Insights (National Association of REALTORS®, Sep. 2023)
“Although the industrial sector of commercial real estate has tapered off from its peak last year, it has now reverted to pre-pandemic levels. Net absorption has fallen by 47% compared to the previous year. A record-high 525 million square feet of additional industrial spaces entered the market, coupled with decreased demand, have elevated the industrial vacancy rate to 5.4% and moderated rent growth to 7.5%. Nonetheless, rental expenses for industrial spaces have persisted in rising faster than in the pre-pandemic period.”
Industrial Space Demand Forecast, Third Quarter 2023 (NAIOP, Aug. 2023)
“The industrial market remains relatively healthy, although not as strong as it was last year. After several quarters of demand for industrial space outstripping supply, the reverse has been true since the third quarter of 2022. Construction starts and transactions have slowed, reflecting higher interest rates, tighter lending standards and cooling demand. Supply and demand for industrial space appear to be converging toward a slower pace of growth that is more aligned with pre-pandemic trends…Given current economic conditions and recent demand trends, the authors, Dr. Guirguis and Dr. Seiler, estimate that quarterly net absorption of industrial space will average 52.6 million square feet over the next two years. Total net absorption for the second half of 2023 is forecast to be approximately 104 million square feet; full-year absorption in 2024 is forecast to be around 205 million square feet; and absorption in the first half of 2025 is forecast to be approximately 111 million square feet.”
What Could You Create?: Commercial Brokers Bring Their Imagination and Market Savvy to Bear in Finding New Uses for Existing Buildings (REALTOR® Magazine, Sep. 20, 2022)
“Churches turned into art centers, factories into microbrew pubs, and shopping malls into medical facilities are just a few examples of adaptive reuse, the term used to describe the repurposing and transformation of an existing structure. While adaptive reuse is not new, changing business and social factors are driving renewed interest. These factors include a hybrid workforce, supply chain disruptions, increased interest in green construction and a lack of affordable housing. The result: more opportunities for commercial real estate brokers to think differently about the highest and best use of a property.”
Brokers Get Creative in Adding Industrial Space
, Jun. 17, 2022)
“With nationwide vacancy rates for industrial properties registering record lows and pricing for those assets skyrocketing, brokers and developers are devising creative strategies to meet the insatiable appetite for space fueled by the e-commerce boom and supply chain issues.” Learn more about how brokers are rethinking and modifying existing spaces to take advantage of the influx of industrial and warehouse properties in local markets.
Industrial & Warehouse Investment
Industrial REITs (NAREIT, Sep. 30, 2023)
“Industrial REITs own and manage industrial facilities and rent space in those properties to tenants. Some industrial REITs focus on specific types of properties, such as warehouses and distribution centers. Industrial REITs play an important part in e-commerce and are helping to meet the rapid delivery demand. Nearly 145 million Americans live in households that invest in REITs. With their historically competitive total returns and comparatively low correlation with other assets make them an attractive addition and diversifier for many Americans’ portfolios.”
Homeward Bound: Reshoring Manufacturing Jobs Brings New Opportunities, But Also Challenges for Industrial Specialists (CREate, Mar. 22, 2023)
More than half of American CEOs (55%) whose companies rely on manufacturing to produce and deliver their products recently reported plans to reshore some operations…As industries compete for industrial space, the high cost and lack of ready-to-build land make older existing facilities more attractive…Commercial brokers who understand the complexities of reshoring and can cultivate relationships with others in the reshoring ecosystem stand to benefit. In addition to economic development agencies, explore opportunities to connect with the global market through foreign consulates, trade offices, world trade centers, and international property shows.”
Brokers Readjust their Thinking in a Post-Pandemic Market (Society of Industrial REALTORS®, Summer 2021)
“Office and industrial properties present a tale of two markets, post-pandemic. On the one hand, the industrial sector has exploded, as providers of product continue to ensure that grocery shelves remain stocked while keeping pace with the accelerated demands of e-commerce. On the other hand, the pandemic is forcing office occupiers to pause and rethink their space needs, even to the point of downsizing to the relatively open spaces of the suburbs with renewed interest.”
How to Approach an Investment in Industrial Property (JLL, Sep. 25, 2020)
“Industrial real estate can include warehouses, factories, depots, and storage facilities, and is often inexpensive to own and operate. It typically provides stable cash flow with long-term tenancies. So, how should you approach an investment in industrial property? As with any investment, it’s important to conduct careful research and be fully aware of the risks associated. While there are many benefits to owning industrial property, it can be a major financial burden if not investigated properly beforehand. With that in mind, [here are some] steps you should take before investing in industrial real estate.”
eBooks & Other Resources
The following eBooks and digital audiobooks are available to NAR members:
Commercial Real Estate Investing 12 Easy Steps to Getting Started (eBook)
Commercial Real Estate Investing – A Creative Guide to Successfully Making Money (eBook)
The Commercial Real Estate Revolution (eBook)
The Complete Guide to Real Estate Finance for Investment Properties (eBook)
A Master Guide to Income Property Brokerage – Boost Your Income By Selling Commercial and Income Properties (eBook)
Successful Real Estate Investing — How to Avoid the 75 Costly Mistakes Every Investor Makes (eBook)
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