What is Industrial Real Estate?
Industrial real estate consists of properties used to produce, store and distribute goods produced such as warehouses and fulfillment centers.
What should you know about investing in industrial real estate?
Pandemic: Industrial real estate was one of the greatest performing asset classes throughout the COVID-19 pandemic.
E-Commerce: Investors have benefited tremendously from the rise of e-commerce as warehouse development has increased exponentially. People are increasingly shopping online which increases the demand for warehouse space to store and distribute these goods.
Vacancy: Investors have seen historically low vacancy rates in this asset class since the rise of e-commerce. E-commerce will only continue to grow, and industrial real estate will benefit from this growth.
Appreciation: E-commerce has been the leading contributor to industrial real estate’s rapid appreciation growth. The U.S. didn’t have nearly enough warehouse space available which made space scarce and property values high.
How can you invest in industrial real estate?
Real Estate Investment Trusts (REITs): REITs make owning real estate accessible to the average investor. REITs are companies that focus on acquiring and managing real estate investment properties. Certain REITs focus on acquiring and managing industrial real estate. An investor can purchase an industrial real estate focused REITs shares in the stock market and become a partial owner. The shareholder will benefit from the property’s appreciation and rental income through the stock’s growth and dividends.
Examples of Industrial Real Estate focused REITs
Duke Realty (DRE) is a REIT that invests in industrial real estate. The trust’s market capitalization sits at $15.6 billion with 534 properties (majority warehouses) and tenants such as Amazon and UPS. DRE offers a 2.43% dividend yield.
Terreno Realty (TRNO) is a REIT that invests in industrial real estate. The trust’s market capitalization sits at $4.05 billion with 222 properties in New York City, New Jersey, San Francisco, Los Angeles, Miami, Seattle, and Washington D.C. TRNO offers a 1.97% dividend yield.
Innovative Industrial Properties (IIPR) is a REIT that invests in industrial real estate. The trust’s market capitalization sits at $4.12 billion with operations in 17 states. IIPR offers a 3.06% dividend yield.
