Steady Investment Class
With the infill / functional nature of light industrial, this class of warehouse buildings typically provides investors with steadier performance than new product in less land constrained submarkets.
Strong Yield Opportunity
Given the aggressive institutional focus on new bulk distribution product, light industrial investment opportunities currently provide the most attractive yields in the industrial real estate market.
“Last Mile” of Logistics Chain
The majority of light industrial demand is generated by national/international firms that need smaller warehouse spaces to serve their end consumers. With the massive growth in demand for E-Commerce space, pressure will continue to increase for companies to find warehouse locations close to the consumers.
Limited Macro Exposure
Light industrial tenants consist of international, national, regional and local companies across a wide variety of industry sectors, which provides a built-in diversified investment. In addition, the average light industrial tenant size reduces ownership’s exposure to any single-tenant.
Limited Capital Expenditures
Low office-finish and flexible, reusable design result in limited tenant improvements and capital expenditures, thereby maximizing cash-on-cash yields.
Limited Construction – During this market cycle, new construction has been vastly weighted towards large bulk product, particularly in the Phoenix and Dallas/Fort Worth market. Per Eastdil Market Data, many Light Industrial buildings were scraped and replaced with multifamily in this cycle.