Investing in Commercial Real Estate: How the smartest investors build wealth in Commercial Real Estate (Real Estate Investing, Crowdfunding, Syndication, Online Investing) by Goldman James

Author:Goldman, James [Goldman, James]
Language: eng
Format: epub
Published: 2019-09-28T16:00:00+00:00

Storage and Distribution

Flex Space

Manufacturing

Manufacturing sites are used for the production and assembly of goods from raw materials. According to NAIOP, these properties tend to have a constituency of less than 20% office space, have loading docks, and clear heights of at least 10 feet. Variations do occur, depending on the purpose of usage. However, two main subclasses are defined: heavy manufacturing and light assembly.

Heavy manufacturing properties are massive. They usually take up tens of thousands to hundreds of thousands of square footage. These plants are used for the manufacture of heavy-duty goods and material that require large, powerful equipment, three-way electrical power, and significant amounts of space for production, packaging and loading. Heavy duty facilities will usually be considerably customized in terms of and will require complete interior modification for every change of tenant.

Light assembly spaces are used for the assembly of goods and products on a much simpler and smaller scale than their heavy-duty counterparts. These properties are also used for product storage and loading, and therefore still require a considerable amount of square footage to facilitate these activities. Light assembly properties do not typically undergo extensive customization and are therefore easier to reconfigure for new tenants.

Storage and Distribution (Warehouse)

This property class is mainly used for the storage and distribution of materials, goods, and products. Office space typically constitutes of less than 15%-20% of these spaces, which are characterized by very high ceilings to provide more cubic room for storage. These facilities may also include specialized storage equipment, such as cold or freezer storage ability. The three most common types of storage and distribution facilities are distribution warehouses, general purpose warehouses, and truck terminals.

Distribution warehouses are used as temporary storage facilities from where goods and merchandise are transported to retail outlets, or directly to customers. As such, these facilities are found close to central transport routes, airports or ports. Distribution centers vary in size and design to meet operational needs. Some of the largest distribution warehouses today belong to Amazon and measure in the range of more than one million square feet!

General purpose warehouses are commonly used as storage facilities, where items are stored for longer periods of time. Depending on what stock it holds, these warehouses may need to be fitted with special equipment, such as cold rooms and freezers for perishable food storage. Door to square-footage ratio is lower than for distribution warehouses, as less movement of products occurs here.

Truck terminals are primarily used for the transit of goods, as they’re loaded from vehicle to vehicle. As such, these facilities have little to no storage space. Their main purpose is the secure and efficient movement of products from truck to truck.

Flex Space

Flex space is yet another subset classification. The term flex commonly refers to the flexibility of a space to combine a general office fit-out that may be air-conditioned, with a warehouse space that is not. This office-industrial hybrid class refers to buildings that combine these two distinct types of space in any configuration. Flex spaces are also known as tech spaces.

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