Most of the attention from analysts and capital these days is focused on the large warehouses and distributors in that space. Despite this, the light-industrial market has been performing quite well with a surprisingly large amount of demand in the current market.
The industrial space has been performing very well and has been the front runner for all commercial property kinds in regards to growth. This is based on factors like supply and demand, rental rate appreciation, and investment sales as well. Within this, the light industrial space has been owner of the highest rent growth each year compared to logistics building, office, and apartments. For the sake of definition, light industrial is considered anything between 100,000 and 300,000 square feet.
The fact that the light industrial space has been growing slowly in regards to new supply recently is a big factor as well. The focus of capital has been elsewhere, on the mega logistics properties, which has been fueled by the e-commerce push to ship orders in 24-48 hours. These efforts have predictably gained a lot of attention, while light industrial has been maintaining a normal pace.
Despite this, the higher rents in this area are now going to become more of a draw for investors. While this hasn’t been looked at much for a while, the figures are finally there to begin warranting a push in this direction. There are many tenants who are eager to find a new space and the money in their industry is supportive enough to make this happen as well. The only thing that is missing right now is the actual space.
Many are saying that this is one of the most ideal markets for current property owners that fit into this sub category. Industrial in general does not commonly have such consistent rent growth and perform better than the other sectors as well.
Because of this, larger private equity investors are beginning to take notice with many saying that they are extremely bullish on this sector in general. This kind of attention is what will eventually trigger the inevitable ebb and flow of the real estate market here, but for right now the early bird will definitely get the worm.