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Industrial property has become a mainstay of the commercial property market, offering stability, returns, and growth. But, many people ask "What is industrial real estate?” and wonder how industrial properties can make a difference to their investment portfolio.

As global trends like e-commerce, onshoring, and sustainability reshape the economy, industrial property is at the heart of it all. For high-net-worth individuals (HNWIs) looking for diversification, industrial property is a way to get financial returns and have a meaningful social and environmental impact.

What Is Industrial Real Estate?

Industrial real estate refers to properties used for industrial activities such as manufacturing, warehousing, logistics, research, and storage. These are the backbone of modern commerce and supply chains. Industrial properties can be divided into various categories, such as the following:

• Warehouses and Distribution Centers: Used for storing goods and distributing them efficiently. Increasingly important due to e-commerce, these facilities are designed for high capacity and seamless logistics.
• Manufacturing Facilities: Designed for production, these properties have heavy machinery and infrastructure for assembling or creating goods.
• Flex Spaces: Office, light manufacturing, and storage spaces fall into this category. In short, these properties are for businesses that need flexibility.
• Cold Storage and Data Centers: These are suitable for perishable goods or data management.

Why Invest in Industrial Property?

E-commerce has revolutionized industrial real estate. Online sales now account for 22% of total retail sales, and every $1 billion in e-commerce growth requires 1.25 million square feet of additional logistics space (CBRE, 2024).

Warehouses are always in demand because businesses need to keep up with fast shipping and omnichannel retail. Interestingly, they're getting bigger and taller. New developments in cities like Atlanta and Cincinnati reflect this trend, with an average of 108,665 sq ft and 3.7 feet taller than the previous decade. These modern logistics hubs enable goods to move faster—a must in a competitive market where consumers expect two-day or same-day delivery.

Industrial property has become the investment of choice, with stability, growth, and resilience to market fluctuations. As global trends like e-commerce and supply chain reorganization drive demand, this asset class is likely to deliver strong returns

For investors looking for diversification, long-term income, and positive impact, industrial property should be a core part of their portfolio. Here's why:

Stability and Long-Term Growth

Industrial property is less volatile than retail or office space. Even in an economic downturn, industrial operations are essential, so there is always demand. For example, while the office market was hit by work-from-home trends during the COVID-19 pandemic, industrial property boomed as online shopping went through the roof.

Higher Returns

Industrial properties yield more returns than other property types. In fact, the average rental yield is 8% for industrial, compared to 4% for residential.

Less Volatility

Industrial properties support e-commerce and manufacturing, which are less affected by short-term market fluctuations. They are fundamental to consumer needs like product delivery and production, so they are resilient.

Longer Leases

5- or 15-year leases mean consistent cash flow and less tenant turnover than other property types. This is attractive to investors looking for predictable income.

Impact Investments

For socially conscious investors, industrial real estate is where financial goals meet positive environmental and social impact. Companies like OpenPath are paving the way with energy-efficient upgrades, renewable energy integrations, and community-focused property management.

Key Investment and Management Insights for Long-Term Success

Once you understand the answer to "What is industrial real estate?" and want to invest in it, you must bear in mind that it requires planning, research, and proper execution. Here are some actionable tips to help you thrive in the industrial real estate market:

Do Your Homework

If you're wondering how to invest in industrial real estate, know that research is critical to finding excellent properties. Start by looking at:

• Location: Properties near transportation hubs such as ports, airports, and highways command higher rents because of their logistics value. According to CBRE, proximity to city centers makes a property more competitive, especially as last-mile delivery demand grows.
• Market Trends: Research regional industrial demand. For example, e-commerce growth has driven up demand for warehouse space, with some cities having a vacancy rate as low as 2.7%.
• Tenant Quality: Long-term leases with stable tenants reduce income volatility. Look for tenants with strong financials or operating in sectors like manufacturing, e-commerce, or data centers.

Beyond these basics, consider environmental regulations and zoning requirements. Mistakes in these areas can delay projects or increase operating costs. Tools like environmental assessments and zoning analysis software can help with this.

Implement Professional Property Management

Industrial property management refers to specialized strategies for overseeing operations in industrial spaces. Industrial properties have different property management needs than residential or office real estate. For instance:

• Specialized Infrastructure Maintenance: Properties like cold storage or data centers need temperature control or digital infrastructure monitoring. Neglect can mean tenant dissatisfaction or operational shutdown.
• Space Efficiency: Industrial tenants need flexibility to expand or reconfigure their space. Managers must plan and execute tenant improvements ahead of time.
• Lease Management: Industrial leases often have triple-net (NNN) terms where tenants handle maintenance, insurance, and taxes. Property managers must ensure tenants meet these requirements while maintaining overall property standards.

Keeping these needs in mind, it makes sense to partner with experienced companies like OpenPath for seamless property management. OpenPath uses sustainable practices like energy upgrades and renewable energy integration to reduce costs and increase property value. Their stewardship approach focuses on operational efficiency, tenant retention, and environmental impact.

Monitor Market Trends

Economic fluctuations and policy changes affect industrial real estate. Investors should watch:

• Interest Rates: Rate cuts lower borrowing costs to buy or upgrade. Rate increases require you to rethink your investment strategy.
• Trade Policies: Geopolitical tensions and onshoring are driving demand for local manufacturing and logistics space.
• E-Commerce Growth: Online sales are expected to be 25% of retail by 2027, so industrial properties serving e-commerce supply chains will appreciate big time.

By staying ahead of these trends, you can anticipate the market and make informed decisions.

Get the Experts on Your Side

If you're unsure how to buy industrial property, firms like OpenPath make the process simpler. They offer:

• Market Knowledge: Their deep understanding of industrial trends helps find opportunities that align with your goals.
• Risk Management: OpenPath addresses environmental, regulatory, and operational risks so you don't have to.
• Operational Excellence: OpenPath's impact-driven investments mean properties deliver financial returns and positive community and environmental outcomes.

For investors new to the sector, this expertise can be the difference between moderate success and exceptional performance.

Align Investments with Ethical, Socially Conscious Values

Today's investors are putting more emphasis on social and environmental impact. Industrial real estate offers a way to live those values. For instance, consider the following:

• Sustainability Initiatives: By adding green technologies—solar panels, efficient HVAC systems, and waste management—properties can reduce their carbon footprint and attract eco-conscious tenants.
• Community Contributions: Investing in properties that create jobs, improve worker safety, or offer community amenities shows social responsibility.

Create Long-Term Value

Industrial properties are long-term investments that require thoughtful planning to get the best returns. Focus on:

• Future Proofing: Concentrate on scalable designs and adaptable spaces to meet tenant needs as they change.
• Technological Integration: Properties with automation, robotics, and predictive maintenance are in high demand. Not only does this improve tenant satisfaction, but increase property value as well.

Trust OpenPath to Take the First Step Toward Industrial Real Estate Success

What is industrial real estate and why should you take it as an important part of your investment portfolio? Industrial real estate consists of distribution centers, warehouses, manufacturing facilities, and other commercial properties. It deserves a place in your investment portfolio due to its growth potential, stability, and resilience in changing economic conditions.

Industrial real estate is a dynamic and lucrative investment, but it's also complex. That's where OpenPath can help simplify it all.

OpenPath Investments is the trusted partner for HNWIs, combining market expertise with social and environmental responsibility.

From property selection to management, OpenPath makes the investment experience seamless and enjoyable with an emphasis on impact-driven real estate. OpenPath's portfolio is focused on energy efficiency, renewable energy, and reduced environmental footprint. OpenPath enriches lives and fosters collaboration in both residential and industrial settings.

Explore the potential of industrial real estate with OpenPath today. Learn more about our investment strategy, or contact us to start your journey.