Industrial Real Estate: The Basics

August 30, 2021 | By: Alec Burchett
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Industrial real estate is unique in its approach compared to other commercial real estate management such as office, medical, facilities etc. The industrial field is growing quickly and catching the eye of many. Those thinking about moving into the industrial management practice of real estate, can become familiar with the basics.

Natalie Tyler-Martin with Duke Realty says that in many ways, industrial real estate and commercial real estate are the same. The primary goal and function of an industrial property manager is to satisfy the needs of their customers or tenants. The major differences lie in who the tenants are and how to go about satisfying their needs.

Who the tenants are and the businesses that they conduct is the largest difference in this type of real estate. In commercial real estate, one often deals with office space. The tenants that lease those spaces conduct business that is maintained within their own suite and their operations don’t have a large impact on the building as a whole. When it comes to industrial real estate, the tenants generally occupy an entire property. These tenants can manufacture, move, and distribute products or cargo all throughout the property and then ship them off site. These operations tend to affect the building not only in terms of increased everyday expenses such as utilities but can also have structural impacts on the building as well.

When looking at how to manage these properties and tenants, there are a few more key differences as well, including leases, responsibilities, risks and much more. There are multiple different lease types used in industrial real estate such as the triple-net lease. These leases lead into different responsibilities of the tenant and the property manager. Tenants are often responsible for maintaining the inside of the building while property managers are more concerned with the exterior and overall structure. Risks in industrial include the same as commercial. One wants to make sure no one slips and falls, but one also must worry about items such as tractor trailers playing bumper cars with the building.

To keep up with all of this, industrial property managers do not usually work from an office like they would in the rest of the commercial real estate field. The office becomes a car as one travels from property to property. The range of operation is not contained to how many stories that are in a building, instead it becomes a region or area of operation that can stretch for many miles from where the property manager is based.

These are not the only differences that you one finds when looking at industrial real estate compared to others. There are many other aspects such as a lack of a common building engineering component that play a huge role in the industry. All of these aspects of this entire profession could not be covered quickly, but these basics provide a good foundation for understanding the uniqueness of industrial real estate management.

 

 

 

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