While investing in industrial properties doesn’t quite stir the soul in quite the same way that renovating a historical Victorian mansion might, it is a strong segment in real estate investment strategies. The sale of industrial properties is on the rise as well as attractive rent growth making this a strong consideration for real estate investors, builders, developers, and Texas commercial mortgage lenders.
According to Real Capital Analytics, sales of these types of properties grew by 3 percent during the first quarter of 2017 compared to the same time frame in 2016. An increase in demand as well as the need for specific property features such as wide loading areas appears to be at the forefront of this increase. Tenants are willing to pay more for the features that allow them to conduct business with ease and efficiency. In addition, as compared to the trial that retail is currently experiencing, distribution centers catering to online shoppers are continuing to grow.
Sales in the industrial sector topped $440 billion in 2016 with Los Angeles, New York, Chicago, Atlanta and Dallas leading the way. Many of the industrial sites that are under construction are already pre-leased and built with a specific company’s needs in mind. A few of these companies with building occurring in the Texas industrial segment include Amazon, FedEx, Ravao and Vinmar International. In Fort Worth, Campbell Soup Company and DHL Supply Chain recently opened a 578,000 sq. ft. distribution facility. This one facility will bring at least 120 jobs to the area and will serve as the hub for southern distribution. Due to demand, these types of projects are appealing to Texas commercial mortgage lenders.
Industrial inventory for distribution and manufacturing make up a little less than 50 percent of this space while warehouses make up the lion’s share. The low vacancy rate of 5.5 percent makes this type of real estate investment strategy very popular. While industrial buildings tend to offer lower rental rates than other commercial buildings such as offices, they also offer lower overhead costs and long-term tenants. The downside is that because varying tenants require unique needs, restructuring the building for a new tenant can be costly. Most commercial properties, including the industrial segment, are high risk and high reward with those that do their homework making incredible sums of money as their portfolio increases.
Considerations for your First Industrial Property
There are several different types of properties to consider for investment purposes. These include manufacturing, warehouse, office-industrial hybrids and distribution centers. Many of these require easy access to major highways. Another consideration is demand and, as previously stated, with e-commerce building momentum, distribution centers fall into the high-demand category. Cities often compete for these larger centers and will offer tax-rebates and even reduced prices for land acquisition as well as reduced Texas commercial mortgage rates.
At Level 4 Funding, we work with hundreds of private hard money lenders, some of which specialize in the industrial segment of real estate investments.
We provide up to $50,000,000 in capital based on collateral. Investors commonly use our funding option when they are in need of quick capital in order to make a bid on a prime property or require access to a Texas commercial mortgage while a traditional loan goes through its usual cycle to funding which can take up to several months. Call us today for a no-obligation quote and to see if this type of loan is right for your next project.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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