For a long time, real estate investments have been popular for being one of the most effective passive income strategies. One of the best ways you can make money through commercial real estate is by investing in warehouses. Over the past 6 to 7 years, this asset has made an astounding comeback. Some investors even see returns of approximately 10% a year!
Here’s a brief warehouse investing guide by New England Commercial Brokerage.
Why Warehouses Are Getting Popular
Even before the pandemic began, several retailers had started moving away from physical stores to an online sales distribution. Now that 2020 is over and online shopping is on the rise, quantity buying has become the norm. Because of this reason, businesses need more supplies, which ultimately means increased floor space.
Another reason for this growth in warehouse demand is due to Amazon giving next-day and same-day delivery. As we write this, several Amazon warehouses are popping up across America. eCommerce fulfillment companies are one of the most prominent reasons why industrial property leases are increasing.
Estimating the Value of a Warehouse’s Space
Several factors can help you in estimating a warehouse’s value. Some of these can be the warehouse’s size, its location, and what the warehouse can be used for. To do this, start comparing the price of the warehouse to similar ones around the city.
Warehouses are priced by the square foot, so before you start comparing prices around the city, make sure that you have the exact measurements. Once you’ve done this, evaluate the condition of the warehouse.
Is it less secure or old?
Does it have specialized equipment?
What is the type of lease?
The Best Location for Warehouses
It is critical that you can receive and deliver goods quickly when you’re investing in a warehouse. If you’re leasing the warehouse to an eCommerce company, the warehouse’s location must be close to seaports, airports, and the highways in your city. That is because the cost of shipping materials or bringing in more products to the warehouse can be 60% of a company’s expenses. It is also necessary that the warehouse is close to a population center because most trucks (needed for delivery across the country) are located near these population centers. But bear in mind that increased traffic and the higher land cost might make this investment less attractive.
Wrapping Up Â
Since the warehousing industry is seeing a definite surge in demand, it’s definitely might be worth your time to consider buying one and adding it to your investment portfolio. With any investment you make, the homework you do always pays off. If you don’t have the time to do it, New England Commercial Brokerage will do it for you.
As of now, we are licensed in:
Georgia,
Massachusetts,
New Mexico,
New York,
Rhode Island,
Tennessee,
Utah &
Virginia
We use cooperative brokers in places where we are not licensed to stay in compliance.
Call us today on 860-648-1600 to get started!