Industrial Real Estate: What Drives Demand?

In the realm of industrial commercial properties, the most popular segment is comprised of smaller warehouse/office spaces and larger distribution properties. Whether you’re a developer looking to build an industrial space or a tenant-owner searching for a building to purchase, it’s extremely important to know what the market currently looks like and the factors driving demand. Typically, prospective buyers need practical assets. Pretty exteriors and trendy office layouts aren’t the highest priority.

The properties that typically lease and sell quickly have several attributes in common contributing to a short time on the market. Buyers are usually looking for two important characteristics – truck-loading capabilities and yard space. 

Industrial tenants absolutely require space to load 18-wheelers, which ties in to the need for high eave heights of about 25 feet. Low ceilings are far from ideal. In addition to adequate loading bays, buyers always need a large yard area. Most companies look for open spaces to store equipment and other materials. These tenants are not searching for small, compact buildings, their emphasis is on open, functional spaces.

Overall, when considering the ideal office to warehouse ratio, most parties are looking for office spaces to be around 15 percent of the total building. Once again, when it comes to determining the success of selling industrial properties, space and usability are the 2 most critical factors in the equation.