Is Industrial Real Estate the Same As Commercial?
According to Jean Francois Desormeaux, is industrial real estate the same as commercial property? Industrial properties are often subject to market fluctuations. Because of this, they can take quite a long time to find a new client. Industrial properties are also more risky for banks to finance, requiring a higher deposit and higher interest rates. In addition, the industrial sector is constantly innovating and evolving, so buildings may be obsolete after a few years. Because of this, industrial property should be carefully inspected and read through the lease before investing.
Industrial properties usually belong to their own district. Industrial properties tend to be larger than commercial properties and have zoning laws that allow them to serve only certain types of businesses. Commercial properties may have difficult expansion restrictions, and an industrial investor could be in for a rough ride if they purchase a property in an area zoned for commercial use. Ultimately, it comes down to what you plan on doing with the property.
Jean Francois Desormeaux pointed out that, in terms of use, industrial properties may be more flexible. For example, some industrial sites may not require buildings, and they can be used to store gravel, mulch, and other surface operations. Other industrial properties may be used for manufacturing purposes, while others may be used for research. Because industrial spaces often have low vacancy rates, an industrial property may be a more lucrative option than a commercial property. But the key difference between industrial and commercial property is that industrial properties can accommodate many different uses.
Despite the differences between commercial and industrial properties, the growth of industrial real estate has been increasing in the past several decades. Advances in robotics and 3-D printing technology have allowed many manufacturing jobs to be automated, reducing labor costs and driving the demand for industrial properties. In addition, more companies are bringing operations back to the US to benefit from economic stability and to provide additional jobs to the labor force.
In Jean Francois Desormeaux’s opinion, industrial and commercial real estate have a number of important differences. Zoning laws define which activities are allowed on a property. Some are restricted to only certain industries, such as factories, while others may be allowed to operate in all areas. There are also different regulations regarding what is allowed and what is not. For example, in Texas, alcohol establishments must be at least 300 feet away from schools and churches.
Another difference between commercial and industrial property is the location. Industrial businesses want the most affordable sites possible and must be located in an area where labor is cheap. Location is crucial for their efficiency. They also need to be close to other facilities for transportation. If a business is not located close to major cities, they may have to ship goods from distant locations. If there is a high demand for warehouse space, other companies may have to move elsewhere.
