Light Industrial – an Investment Class

➢ Steady Investment Class – With the infill / functional nature of light industrial, this class of warehouse buildings typically provides investors with steadier performance than new product in less land constrained sub-markets.
➢ Strong Yield Opportunity – Given the aggressive institutional focus on new bulk distribution product, light industrial investment opportunities currently provide the most attractive yields in the industrial real estate market.
➢ “Last Mile” of Logistics Chain – The majority of light industrial demand is generated by national/international firms that need smaller warehouse spaces to serve their end consumers. With the massive growth in demand for E-Commerce space, pressure will continue to increase for companies to find warehouse locations close to the consumers.
➢ Limited Macro Exposure – Light industrial tenants consist of international, national, regional and local companies across a wide variety of industry sectors, which provides a built-in diversified investment. In addition, the average light industrial tenant size reduces ownership’s exposure to any single-tenant.
➢ Limited Capital Expenditures – Low office-finish and flexible, reusable design result in limited tenant improvements and capital expenditures, thereby maximizing cash-on-cash yields.
➢ Limited Construction – During this market cycle, new construction has been vastly weighted towards large bulk product, particularly in the Phoenix and Dallas/Fort Worth market. Per Eastdil Market Data, many Light Industrial buildings were scraped and replaced with multifamily in this cycle.
➢ High Employment Growth Markets