MARTIN LANDIS

Managing Member (CEO) of Landwin, LLC

The real estate business can be complicated and difficult to navigate for many prospective investors. Even for those who have been in the business for a long time must adapt to the ever-changing ways in which the real estate market is growing. When looking into industrial property investments especially, there are many considerations to factor into one’s process. Whether you’re buying or selling, it’s important to know the basics of what helps to determine the valuation of an industrial property.

Much like residential real estate, certain things will raise or lower the value of any given property. Understanding what makes these prices fluctuate will help you make the smartest business decision for yourself or your company. In this article, we’ll go over the basic definition of “industrial property,” some of the most salient factors that determine the valuation of such properties, and what you can do to learn more and move forward with your real estate opportunities.

What is Industrial Property?

An industrial property is similar to residential property in many ways; however, the underlying motivation might be different for prospective investors. Industrial properties are a subdivision under the umbrella of commercial properties that usually include: retail business use, company office facilities, or industrial uses. Industrial use can further be broken down into smaller, larger, or significantly larger operations. The building and facility must be properly zoned, and depending on the needs of the business or company, the space should also allow for adequate storage, larger mechanical operations, and even an area for office space.

Factors that Help Determine Industrial Property Valuation

Just as one would have a list of factors to consider when purchasing residential real estate, it’s important to know what to look for in a “smart” industrial real estate investment opportunity. Not all industrial properties have a high yield, and unless you’re looking to use the space for your own purposes, you’ll have to factor leasing to tenants into your long-term plan. While industrial properties can be a gamble to invest in, depending on the following factors the property valuation might make it worth your while. The value of an industrial property is different than the “valuation;” value is what makes the investment worth the investors’ time down the road, while valuation is how the property will be appraised. The following list includes factors that can affect both the value and the valuation.

Nearby Competition

Every heard the phrase “healthy competition is good”? Well, in this case it can be both a mixture of good and bad. Nearby competition can be good for your future business in that it can help guide your marketing and advertisements and help keep your business relevant in the area.

Location

Whoever said “location, location, location” might be on to something; as the location of an industrial property greatly affects the value. Properties that are located nearby bigger cities have a higher demand, as there’s less travel distance to and from other business locations and residents. The location of the property should also take into consideration the demographics in the town or city where it resides.

Building Structure

The age and condition of the property are also critical to factor into your investment decision. Buildings that are in poor shape can often be valued lower, or at least there may be more wiggle room for negotiations.

Nearby Commercial Real Estate Developments

When thinking about investing in an industrial property, it’s helpful to investigate the area that surrounds the building. You’ll want to look for signs of a blossoming economy, such as nearby strip malls and other businesses that bring traffic flow to the area.

Future Opportunities and Developments

Looking at the immediate profitability of an industrial space is important, but often very limiting. Factoring in the other aforementioned concepts, it’s helpful to look into the future at the possibilities of the building, including what is up-and-coming in the areas nearby and determining how that might affect your property income.

Our Passion and Purpose

Industrial Property Architecture As previously mentioned, real estate investments can be tough to navigate for the majority of individuals. The investment experts at Landwin can help guide you through the process of making the most fruitful investments. As one of the leading real estate investment companies with offices in Encino and Century City CA, we have invaluable experience working with a diverse range of clients and properties, including industrial real estate. Put our reputation and integrity to the test—please contact us directly to learn more about our company philosophy and how we can help you secure your future in real estate.

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