Industrial Frequently Asked Questions
Industrial Frequently Asked Questions
Commercial industrial real estate includes properties used for manufacturing, warehousing, distribution, assembly, research, storage, logistics, and related business operations. Common property types include warehouses, manufacturing plants, distribution centers, cold-storage facilities, flex spaces, truck terminals, and industrial outdoor storage sites.
Commercial industrial real estate includes properties used for manufacturing, warehousing, distribution, assembly, research, storage, logistics, and related business operations. Common property types include warehouses, manufacturing plants, distribution centers, cold-storage facilities, flex spaces, truck terminals, and industrial outdoor storage sites.
Start by evaluating whether the property supports your operational and financial objectives. Property location and accessibility to major highways, ports, railways, and airports may also be a consideration. You will need to know how the property is zoned and if that is correct for your industry or if other zoning/permitting is required. Once you determine if the location works for your business, the building(s) will need to be examined. Make sure that it is structurally sound. Is there room for expansion if you may need it? Does the layout work for the operation of your business? You will want to look at things like ceiling clear height, the number of loading docks and drive-in doors, electrical capacity, parking and truck-court space. Will there be renovations before the building is ready for occupancy? Each property has its own list of considerations. Using a professional commercial real estate broker to help navigate these considerations is very helpful in this process.
For the last ten-plus years, investors and users have struggled to find quality buildings for sale in the Louisville market. Demand has been strong over this time and will likely continue. The industrial properties that are typically available for sale generally have challenges—whether functional obsolescence or location/access issues. When a quality building in a good location does come to market, it generally attracts multiple offers.
Activity is strong across every submarket in the Louisville area. The South and East submarkets are historically the most active in the market.
The most important features for warehouse and distribution facilities are ceiling heights and loading. Loading features include dock doors and adequate truck maneuvering area. Other features such as power and climate-controlled areas are becoming increasingly important, but ceiling heights and loading continue to move the needle.
Clear height is the usable vertical distance from the finished floor to the lowest overhead obstruction. Greater clear height can allow for taller storage racks, more efficient inventory systems, and higher storage capacity. The appropriate height depends on the buyer’s intended use, equipment, inventory, and material-handling requirements.
A dock-high door is positioned at trailer height so goods can move directly between the truck and the building. A drive-in door, sometimes called a grade-level door, allows vehicles or equipment to enter the building from ground level. Many industrial users need a combination of both.
To determine the value of an Industrial investment property several criteria are considered. Comparable property sales in the area are reviewed, along with net operating costs, cap rates, and the price of the property per square foot. If the building is leased, a buyer would look at lease terms for the current tenants and the quality of the tenants as well. The vacancies in the area as well as market rent rates. Location is also a consideration when determining property value. If the property can be diversely used for more than one type of business, this can help to increase the cost and rental rates. Owner-occupied properties may also be evaluated based on the economic benefit of owning versus leasing.
A successful commercial industrial acquisition typically requires a team of professionals with expertise in real estate, finance, law construction, and property due diligence. Because industrial properties can have unique physical and environmental considerations it may also be necessary to involve professionals including environmental consultants and property inspectors. Depending on the property, an architect, civil or structural engineer and surveyor may also be needed to evaluate issues with the building or property. Assembling the right acquisition team early in the process can help identify risks, control costs, and support a more informed investment decision.
The biggest risks with purchasing industrial real estate are related to the property’s physical condition, legal restrictions, operating requirements, and future financial performance. Environmental contamination can create significant cleanup costs and liability, while zoning or use restrictions may limit how the property can be occupied or developed. Buyers also face the possibility of unexpected capital repairs, such as roof HVAC, electrical, plumbing, or structural improvements. For investment properties, tenant vacancy or default can reduce cash flow and create additional leasing costs. Industrial properties must also have adequate power, utilities, loading areas, and truck access to meet the needs of current or future users. Functional obsolescence, such as inadequate ceiling heights, outdated layouts, or insufficient loading capacity, can reduce the property’s competitiveness and value. Other risks include limited resale demand, rising insurance and property-tax costs, and changes in surrounding land use that could negatively affect the property’s desirability. Buyers should also be careful not to overestimate rental income or underestimate improvement and operating costs. Thorough due diligence – including financial environmental, legal, physical, and market analysis – can help identify these risks before closing and allow the buyer to properly account for them in the purchase price and investment strategy.
Any person can search for commercial real estate space on their own. However, a broker can do much more than just find a space. A broker uses their expertise and market knowledge in the leasing process. Brokers also have access to various search and marketing analysis tools that are not available to the public. A broker starts with a good understanding of your business and gives you advice as to the best space suited for you, based on location, demographics, traffic counts, rental rates, etc.
- Time efficient: We analyze and compile data on all advantageous locations that meet our clients’ needs in order to focus on the most desired property.
- Maintains Records: Broker will retain important records and documentation in reserve for future Tenant’s needs.
- Representation: We provide invaluable expert assistance to help manage the transaction with the constant attention that is required.
- Protects Tenant: By advocating exclusively for our client, we navigate through any obstacles that may arise throughout the leasing process.
- Advise Objectively: Throughout representation, we remain focused, organized, and objective to ensure our clients’ needs are front and center.
- Maximize Benefits: We negotiate to maximize Tenant improvements while relaying all important information to ensure expectations are met.
- Creates Competition: We will show properties that meet all essential needs of our Tenant and communicate that to the landlord.
Cushman & Wakefield | Commercial Kentucky is part of the Cushman & Wakefield Alliance, a global commercial real estate services firm with 400 offices in approximately 60 countries employing 52,000 employees. All real estate requirements may be local, but our reach expands beyond the boundaries of Kentucky and Southern Indiana to service the national and international needs of our clients. Many local companies have started small, but have seen their enterprises grow to require the expertise of C&W professionals around the globe. Contact us to learn how we can assist with your local, national, and international real estate opportunities.
CCIM stands for Certified Commercial Investment Member. CCIM designees are recognized as leading experts in commercial investment real estate. A Certified Commercial Investment Member (CCIM) is a recognized professional in commercial real estate brokerage, leasing, asset management, valuation and investment analysis. As an experienced expert, a CCIM is an invaluable resource to the commercial real estate owner, investor and user.
SIOR stands for Society of Industrial and Office Realtors. Like CCIM, this is a designation representing an advanced course of study available to Realtors. SIOR is an invitation only society with strict educational and experience requirements. SIOR is a global network of more than 3,000 industry leaders that stay at the forefront of innovation in commercial real estate via dedicated experience, ongoing education, a consistent focus on emerging trends, and real life experiences shared between members. SIORs value the power that comes with building relationships and sharing ideas that are on the leading edge of the industry.
There is a lot to consider when deciding the right time to start looking for new space. Some of the issues that might affect the time it could take to find new space will be; market conditions, type of space you need, is this a relocation or additional space, just to name a few. When you think you might need new space it is best to call and engage a real estate broker that specializes in the type of space you need. If you need industrial/warehouse space call an industrial broker, if office space, call an office broker. The specialist will know nuances about the market that will save you money and time. In general, the process takes longer than most would think it might. In an average market under average circumstances, it is good to start between 6 to 9 months prior to the date you would need to move into the new space.
Tenants often find themselves pressed for time because they don’t realize the time that it takes to relocate or renew a lease. Commercial properties often need customization for the space. This could range from building out offices in an industrial space to adding fiberoptic cable to an existing office. Scheduling these things can take time that may not be available if you wait too long to start the process.
The lease renewal or extension process can also be time consuming and detailed. Using a commercial real estate broker to help guide you through the renewal process is beneficial for any tenant. The broker will advise on any rent increases, extension terms, and help to determine if staying in your space is the best option for your business based on current market and industry knowledge.
A Listing Agent represents the best interest of the Owner of the property. It is the Listing Agent’s job to find the best Tenant to lease the property on behalf of the Owner. The Listing Agent should use their market knowledge to get the best deal done for the Owner.
A Tenant Representative represents the Tenant looking for space and has their best interests in mind. It is the Tenant Representative’s job to find an appropriate property based on the Tenant’s needs. The Tenant Representative should use his or her market knowledge and other tools to get the best deal and property for their client. Click here for more information on our Tenant Representation Services.
Some agents will work solely as the Listing Agent while others focus solely on representing Tenants. On the rare occasion, you can have a broker representing both the Landlord/Owner and Tenant on the deal.
Most commercial leases are structured over a 3 or 5-year term. However, there can be advantages and disadvantages to negotiating a term for more, or less, than what’s customary. A tenant who may be able to commit to a lease term longer than five years may find landlords willing to negotiate things like free rent or a larger tenant improvement allowance. Tenants who are only willing to commit to a one or two-year lease term may find landlords less motivated to negotiate flexible terms, concessions in rent or willing to make needed alterations to the space. The market conditions will also play an important role in who (landlord or tenant) may have favorable leverage while negotiating term as part of a proposed occupancy arrangement as existing supply and demand of space may dictate whether or not a landlord feels compelled to entertain leasing arrangements that are accompanied by tenant stipulations. The owner of the building will also be a key component to term flexibility as each owner will have a different appetite for filling their vacancy alongside some of the aforementioned factors.
