REoptimizer® Blog

A Five Point Checklist for Leasing Industrial Real Estate

Posted by Don Catalano on Apr 28, 2014 12:55:00 PM

Finding industrial space for your company requires a unique corporate real estate strategy. With industrial property, the details of the building tend to be more important compared to other property types. You probably wouldn't disqualify an office space because it has 9 instead of 9.5-foot ceilings, but in an industrial property, small differences in clear height or in column spacing can have significant impacts on efficiency. As you develop your corporate real estate strategy for industrial properties, here are five factors to consider:

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Topics: industrial real estate, commercial real estate, tenant tips, CRE, corporate real estate strategy

7 LEED Investments that Improve Industrial Real Estate

Posted by Michael Sweeney on Oct 11, 2013 11:18:00 AM

In 2011, the green building industry experienced a fundamental shift. For the first time, LEED-certified retrofits of existing buildings outpaced LEED-certified new projects. While LEED benefits for office buildings have existed for years, the LEED v4 standard that is currently approved and awaiting formal launch, includes customized adaptations for industrial real estate properties including data centers, warehouses and distribution facilities. 

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Topics: industrial real estate

Top 3 International Markets for Industrial Real Estate

Posted by Michael Sweeney on Sep 25, 2013 11:01:00 AM

For a business that operates around the globe, it is imperative to invest in industrial real estate in other countries. The world's leading industrial real estate markets operate actively from North America to Asia. Whether you need a base for warehousing or you need a place where you can assemble and manufacture goods, here are three markets that an international business needs to be looking at.

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Topics: industrial real estate

Keeping Your Industrial Real Estate Costs Low

Posted by Jordan Slater on Apr 20, 2012 11:44:00 AM

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Topics: industrial real estate

Am I Paying Too Much for Industrial Real Estate?

Posted by Jordan Slater on Mar 28, 2012 11:05:00 AM

The cost of your industrial real estate includes more than the rent. Besides the obvious items of taxes, insurance, utilities and CAM, there are the less visible logistics costs: business travel for your employees; the effect of your location on the cost of available labor.

A key metric is the annual rent as a percentage of property value.  This should be in the range of 15% to 16%, closer to the low end for a highly valued property, closer to the high end for a less attractive one.  Compare rents in the area for comparable properties that would suit your purpose, allowing for differences in build-out costs and other operational costs.  The value of the property can be determined by an appraisal or from sales records.  Divide the rent by the property value and see if the result is located acceptably in the 15% to 16% range.  If the result is greater than 16% assess whether this is due to greater than usual anticipated growth in value for the property.  If the result is less than 15%, examine the property and the deal very closely to determine why the price is so low.

Key Metrics for Your Industrial Real Estate Benchmark

There are industrial real estate software packages available to assist in your evaluation of your rental position.  Commercial real estate software can aid in your determination of the property value in the same fashion as if you were considering a purchase of the property.  Then it can calculate rent as a percentage of property value.  However, like any computer application, do not put total dependence on the results.  Use it as another tool that can quickly provide valuable comparative metrics.  Then, having performed a comparison of the logistics costs described above, you will be in a position to know your rent position.

Note that industrial real estate values are not static over time.  If, during the term of a lease, the property value should fall, it may be appropriate to negotiate for a decrease in rent.  Conversely, if the value of the property should increase, you should anticipate an increase in rent at the end of your lease.

 

Other great Industrial CRE articles:

5 Secrets of Industrial Site Selection

Four Tips for Maximizing Your Industrial Utilization

A Five Point Checklist for Leasing Industrial Real Estate

 

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Topics: industrial real estate