Industrial Real Estate As An Investment
Recently we marketed a vacant industrial building in Medina for lease or sale. It was an older building, but well maintained. We believed, based on market comps, that it was worth around $850,000. We were able to lease it to a national credit tenant for eight years with options to renew. Upon adding some tenant improvements, the occupied building is now worth almost double the original estimated value.
The point here is, there are two ways to purchase industrial real estate or most any investment real estate, vacant or leased. The higher risk is acquiring it vacant and having to support the expense of financing and operation, i.e. debt, taxes and maintenance, etc. Or making a larger investment in an occupied building with cash flow to support debt and pass on the taxes and maintenance to the tenant. Both are good choices if the risk is acceptable as measured against the return.
While buying a vacant building is the higher risk, due to vacancy, taxes and potential cost of tenant improvements, it should also have the potential to double your value and provide cash flow. Buying an occupied building is not without risk, but you can mitigate the risk by researching the credit worthiness of the tenant and the terms of the lease. You also have the chance to measure the value and risk against other investment options.
We at Gerspacher Real Estate can assist you in evaluating these options. Call us today.
View our industrial listings here.