Industrial real estate properties are often used for heavy manufacturing processes, which require massive amounts of power and heavy machinery. These properties often belong to large corporations and are custom-built to meet the specific needs of their current tenant. They are often occupied for many years and are expensive to reposition. There are a variety of different types of industrial properties, and understanding the differences between them is important to your business decision.

Class C Industrial Real Estate

Generally, Class C buildings are older than 20 years and need extensive renovation. While many of these properties may still have some of their original plumbing, wiring, and appliances, they are not in the best physical condition. Moreover, these properties often don’t have any on-site amenities. Investing in these properties, however, is not without risks.

Class C buildings are often located in less desirable areas and have outdated infrastructure. They also tend to have lower ceilings and fewer truck docks. In addition, these properties typically lack modern amenities, like air conditioning or heating. As a result, investors should plan for significant capital expenditures and build up large maintenance reserves. Despite these disadvantages, Class C properties usually command lower rents than Class A properties and are suitable for many different uses.

Cold storage facilities

Cold storage facilities are types of industrial real estate that can help businesses store and deliver perishable goods. These warehouses are often specialized and built for a specific tenant. Some of these warehouses have unique finishes and infrastructure that can be customized for that tenant. Data centers are also specialized types of warehouses that hold rows of technology materials.

A cold storage facility is a refrigerated warehouse that is used to store perishable items. The temperature in a cold storage unit is usually cold, ranging from 34 degrees to -10 degrees Fahrenheit. These facilities are important to many different businesses, from food manufacturers to pharmaceutical firms. Because cold storage properties require special utilities, they are very expensive to operate. Therefore, it is important to consider this type of property when buying a commercial property.

Distribution warehouses

Distribution warehouses are primarily used for the shipping of products and are located near major transportation lines. Typically, distribution warehouses are big, with more than a million square feet. These properties are often custom-built and equipped with high-tech equipment. Depending on the size, these properties can accommodate many different types of businesses. Amazon, for example, has several custom-built high-tech distribution centers located across the United States.

Distribution warehouses are the most common type of industrial real estate property. These properties are typically large and can range in size from 50 to hundreds of thousands of square feet. They are usually single-story structures with a high ceiling and a large number of loading docks and truck doors. Distribution warehouses also often feature minimal office space and are best suited to businesses that distribute goods.

Light manufacturing facilities

Light manufacturing facilities are the type of industrial real estate properties that are used to assemble, convert, and fabricate raw materials. These properties may be larger than 50,000 square feet and require significant electrical power, large loading docks, and space for heavy machinery. The properties are often designed for flexible use and can be reconfigured to accommodate different tenants. The main difference between light manufacturing facilities and heavy manufacturing facilities is the type of construction and layout. Heavy manufacturing properties are larger and generally contain more sophisticated machinery and complex equipment.

Light industrial properties are usually located in inner-city areas. They have multiple uses, including warehousing and distribution. They also have an attractive risk-reward ratio, making them a desirable asset class for institutional investors.

Research and development facilities

Research and development facilities are often part of industrial real estate properties. Such properties are used by companies to create new products and test existing ones. These facilities include labs, offices, and sometimes even light manufacturing areas. The use of these facilities varies by the tenant, but some are very specialized. For example, Google is building a new self-driving car research facility that will cover 53,000 square feet. It will be located near Detroit, where it has access to some of the country’s best auto talent.

These properties are ideal for investors because they typically have long lease terms. They range from three to fifteen years. In addition, these terms can include annual rent escalation. These characteristics make industrial buildings ideal for those seeking a longer investment horizon. Inflation risks are also minimized with industrial leases.