Industrial rental properties can range from warehouses or other multi-use spaces used for goods production, storage, and distribution. If you are interested in investing in an industrial rental space, there are some things to know beforehand that can help. Below are a few essential tips that you may want to consider when investing.

Class Types

When investing, you should know that there are different types of spaces. Class A industrial spaces are new high-quality spaces with top-of-the-line systems. Tenants in these buildings typically have high incomes. Since these buildings are new, investors can have peace of mind knowing there will not be many issues to put more money into. Class B industrial spaces are older than Class A spaces and have lower rental costs. They are well-kept and, with a little extra money, can be renovated into Class A spaces.

Class C spaces are at least 20-years-old, have some maintenance issues, and are often located in less-desirable areas. Their investment rates are lower than any other space. With extra time, money, and creativity, Class C properties can be converted into higher-value spaces. Making improvements to Class C properties can be beneficial in helping your business and add value to your property.


Location is a big factor when it comes to industrial spaces. Now that e-commerce is more popular, you need to consider picking a location based on travel time and traffic. This is because you logistically want to pick a location that is easy to receive goods from your suppliers and is easy to ship to your consumers.

Industrial rental space

Types of Industrial Spaces

There are many different types of industrial rental spaces you could invest in. It is helpful to differentiate the spaces to know the variety of tenants that come with the spaces.

Industrial Land

Industrial land is industrially zoned, but has no permanent structure on the property. This land is used for parking equipment, storing gravel or mulch, and other operations. When investing in industrial land, there is an opportunity to build on the property. The long-term vacancy rates have been historically lower on industrial real estate versus other commercial real estates. There are also opportunities of having the landowner pay the upfront construction costs for what the tenant desires. Then the space is leased to the tenant after completion. This opportunity is called “build-to-suit.”

Industrial Build-To-Suit

As briefly explained above, build-to-suit spaces are when the landowner pays the upfront construction costs for a structure per the tenant’s requests. The landowner then leases the property to the tenant when it is completed. These are great for landowners because it takes the stress of vacancy rates out of the picture since there is already a tenant. This creates less risk than building a structure on your own, also called “speculative building.” Speculative building can be pretty risky, but it is smart when warehouses around you have low vacancy rates. By building a new warehouse, you are immediately putting it on the market and meeting the demand.

Bulk Warehouses

Bulk warehouses are the largest properties, around the 50,000-100,000+ square foot range. They are typically located outside of the metro area and are accessible to highway systems for trucks. Sometimes the goods produced in these are sent to consumers, but they are mostly used to produce bulk goods. The goods are sent to retailers and other distributors.

Flex Warehouses

Flex spaces, just as the name implies, are flexible and can be used for multiple purposes. There is extra space in these warehouses for offices. Flex warehouses are most often used for research and development, showrooms, and data centers. Since they can accommodate such a wide variety of tenants, these spaces are highly sought after.

Cold Storage

Cold storage warehouses store perishable food and products using HVAC systems that keep the warehouse between 34 degrees to -10 degrees. They distribute food and products to grocery stores. The demand for cold storage warehouses has risen within the past two decades due to consumers wanting fresher foods.

Why You Should Invest in Industrial Rental Spaces

Investing in industrial real estate can be a very profitable way to invest your money. Industrial properties typically have fewer maintenance requirements than residential real estate. Additionally, tenants typically sign long-term leases that provide you with a steady income. It is not difficult to find new tenants due to low vacancy rates and there are always businesses looking for spaces.

Interested in Investing in Industrial Rental Spaces?

Schwarz Properties, located in North Carolina, is one of the largest providers of commercial and industrial real estate in the Southeast. We lease our own commercial and residential properties and help businesses find a property that is right for them. We offer flexible leasing options, online payments, we are available 24/7, and have local knowledge. Want to learn more? Give us a call at (336) 625-6076 or visit our website.