A captain of industry: Investing in the industrial property sector

| September 26, 2013 | 0 Comments

industrial propertyIf you are wanting to dip your toe into the industrial property market, you will need to have enough research and information behind you in order to make a valid and worthy investment.

What is the industrial sector?

Industrial property centres on standard industrial estates, warehouses, factories and any other logistics facilities. Smaller properties are often known as ‘flex’ or ‘R&D’ sites, whilst you can also opt for larger ‘big box’ properties that are more than 50,000 sq ft, such as large warehouses and industrial units.

Like all forms of commercial property, they are primarily centered in London and the south-east of England. However, beyond the capital, there are plentiful resources in port cities such a Liverpool, Portsmouth and Southampton, whilst manufacturing and engineering towns like Sheffield and Bristol also offer many industrial units.

Note that there is a distinct difference between factories and warehouses. Whilst factories contain machinery for manufacturing and processing, warehouses prioritise storage, especially if you have huge stock to store.

Why industrial?

Warehouses are often one of the most common first point-of-calls for new businesses, as they will need somewhere to store their initial stock and equipment if they have not set up shop yet. Warehouses will be used by importers, exporters, manufacturers, wholesalers, and even transport businesses.

What should I be looking for?

When looking to buy industrial property, there are certain factors to consider:

  • What features do you need to suit your business? Considerations include size, ceiling height and how far apart the internal pillars need to be so you can carry out your daily business.
  • Do you have enough space in case of future surplus storage?
  • What supplies and equipment can be stored outside, if any?
  • How are the docks situated in the property for loading and unloading?
  • As an average rule of thumb, between five and ten per cent of industrial space is office space, so make sure you have enough area for your administrative needs.
  • Location is key, especially with warehouses. Will you be close to your suppliers and customers? Is there good availability of skilled workers in the nearby area? Remember that the industrial field needs specialised abilities, such as engineering, supply-handling and packaging; more so than the office, retail and hospitality sectors. You need to find the right balance here as out-of-town spaces will give you more floor space for your money, whereas city locations mean that it will be close to amenities, suppliers and customers.

There are also a series of risk factors to consider such as heavy maintenance costs that you may be responsible for as a future landlord, tenancy stability and both capital and growth risk.

Before signing on the dotted line, the final checklist of things to consider are:

  • Site access
  • Condition of utilities services such as power, water and sewage
  • Land and building measurements
  • Can any of the space be sub-letted for other use e.g. office space in a warehouse
  • Condition of grounds, lifts and floors

With yields being offered anywhere between seven and ten per cent, the industrial sector is definitely worth considering, but be sure to seek professional advice whenever you are unsure about any technical jargon.

Visit PropertySales for a diverse and wide collection of industrial units for sale.

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