Emerging CRE tech tools empower industrial investors to conduct more thorough market research, find better properties, and ultimately land bigger deals.
While industrial properties may not be, at first glance, as enticing as other commercial property types, they’ve long been considered extremely safe assets. With an average annual total return of 12.8 percent over the past five years — higher than any other asset class — it’s no wonder investors continue to flock to these massive, evergreen facilities.
Studies have also shown that industrial property sales increased by three percent in 2017’s first quarter, compared to 2016; and as e-commerce continues to dominate the retail market, the need for “last mile” industrial warehouses that can facilitate near-immediate urban delivery is more urgent than ever. With both demand and profitability on the rise, investors would be wise to leverage emerging CRE tech tools to gain competitive footing in the marketplace.
Factors To Consider When Investing:
Before investing in an industrial property, there are a number of factors to consider in order to obtain the best return on investment.
Location, Location, Location
You’ve heard it before and you’ll hear it again: proximity to a major transportation hub — including access to highways, interstates, and railways — is essential in ensuring an industrial space remains profitable. Any opportunity to decrease the cost of fuel for shipping increases the property’s value.
Financial incentives from cities or states can also have an impact on overall building cost and value. Since large industrial properties can often create jobs and increase local property taxes, cities will often offer certain incentives such as tax rebates in order to vie for the property.
As demand increases for industrial spaces, so too does demand for the state-of-the-art, future-focused amenities necessary for tenants to thrive. In general, tenants want a property with low-density parking, high ceilings, a large number of truck bays, as well as the right mix of office space to fit their needs.
How A CRE Data Platform Can Facilitate Smart Industrial Investments
The proliferation of new CRE tech tools and the digitization of property-related data offers investors a chance to simplify the process of identifying and acquiring an industrial investment by abbreviating the time-consuming processes that often stall a deal’s progression.
Simplify Market Research
Not only do these platforms aggregate and interpret swaths of disparate data points from a variety of public and proprietary sources, but they also give investors the opportunity to search properties by specific building type, square footage, zoning district, mortgage maturation, and debt history. Investors can filter searches to include only industrial properties in manufacturing zones, for example, and can note the building footprint as well as parking lot density, both of which can affect the asset’s value.
Increase Deal Velocity
The due diligence process for a single commercial property can take upwards of thirty days — to say nothing of the market research necessary to select the property of interest to begin with. While investors could devote weeks or months to either process, CRE data platforms have the potential to accelerate overall industrial deal velocity — from the identification of opportunities to underwriting to the awarding of assets.
Identify Under-the-Radar Opportunities
Easy access to a property’s ownership history empowers competitive brokers to identify potential opportunities before they go on the market. If for instance, a certain owner is already carrying a substantial amount of debt as one of their mortgages approaches maturity, they might be willing to part with the asset before the property is publicly available.
Get In Touch
Once a property of interest is identified, powerful CRE tech tools can now pierce through opaque legal entities like LLCs and holding companies to identify an asset’s current owner or primary decision-maker — rendering the dreaded cold-calling process all but obsolete.
The commercial real estate industry finally has the technology necessary to accelerate the time-consuming processes that has long kept investors of all sizes from developing a meaningful competitive edge. Emerging tools have simplified the process of identifying opportunities and acquiring high-value industrial properties, facilitating easier entry into a safe, reliable, and growing market. The data is here to help us — let’s make us of it.
About the Author:
Richard Sarkis is CEO and Co-Founder of Reonomy. Since founding the company in 2013, Sarkis has led Reonomy through a successful national platform launch and been instrumental in raising $18M in venture capital.
An avid entrepreneur, Sarkis has launched and run numerous businesses including an international arbitrage textbook company, a college marketing network, and an offshore technology outfit. He was most recently an Associate Partner at McKinsey & Company specializing in Financial Services before deciding to return to his entrepreneurial roots.