A multi-tenant industrial property comprises several small spaces spread over numerous buildings in an industrial business park.
The market for single-tenant industrial properties is generally frenetic as only institutional investors with the required assets aim for it. On the other hand, the multi-tenant property is usually valued under $20 million and offers a unique opportunity to independent investors, syndicators, and entrepreneurs planning to acquire an asset.
Here are some key attributes to consider while investing in a multi-tenant industrial property.
Abundant Value-Add Opportunities
A majority of multi-tenant industrial properties have been historically mismanaged by disconnected investors who failed to manage multiple tenants, lease units, and common areas. If you are a diligent investor seeking value-add opportunities, you can transform these obstacles by making capital and management improvements, building relations with tenants for high renewal rates that can ultimately increase your net operating income and residual value.
Minimal Lease-Up Costs
Multi-tenant properties generally include a modest office that is renovated when finding new tenants. Hence, once you have made the initial capital improvements, the only lease-up costs include cleaning, flooring, and painting.
Varied Tenant Base
Multi-tenant industrial properties usually comprise small businesses and local branches of large distributors or manufacturers. No single tenant represents more than 10% of the assets. Since it is unlikely that any single circumstance can impact your varied tenant base, investors can cultivate rent roll resilience.
Potential for Rental Increase
The tenants who lease multi-tenant industrial properties are usually willing to sign a short-term lease of 2-3 years. This allows investors to balance rent roll with market agility and increase rent regularly in today’s fast-paced industrial market.
Multiple Exit Options
If you want to exit your investment, you can sell the entire property the conventional way to another investor or maximize profits by selling each unit as a separate industrial condominium at a retail rate.
In conclusion, a multi-tenant industrial property can be a great investment opportunity for diligent investors who have the strategic oversight and are prepared to handle the necessary management and leasing activities.
Hi! We’re Josh and Jolene Baijot, the creators of this website. We’re also commercial real estate brokers in Bellingham, Washington. Thank you for taking the time to read this blog post. We appreciate your time spent on this site. You can connect with us on Facebook, Instagram, or contact us through this website.
