What is a warehouse property?
A warehouse property is a commercial building or complex used for storing and distributing goods. Warehouses are typically large industrial spaces with high ceilings and loading docks for trucks and other vehicles to access the building easily. They may be used to store various products, from raw materials to finished goods, and may be operated by manufacturers, distributors, and logistics companies. Some warehouse properties may also include office space for administrative staff.
Why invest in warehouse properties as a commercial real estate investment?
Warehouse properties can be a good investment for many reasons:
- Demand for warehouse space is often strong, particularly in areas with well-developed transportation infrastructure and a growing population or economy. This can help to ensure a steady stream of rental income for investors.
- Long-term leases are standard for warehouse properties, providing stability and predictability for an investor's cash flow.
- Industrial properties like warehouses often have a relatively low vacancy rate, which could minimize the risk of a lack of tenants.
- Logistics industries, e-commerce, and online shopping have been growing, increasing the need for more warehouse properties as fulfillment centers.
- The cost of construction and land acquisition for warehouse properties can be relatively low, leading to high investment returns.
- Warehouses are often seen as less affected by economic downturns and recessions since they are necessary for storing and distributing goods regardless of the economy.
Where can I find warehouse properties for commercial real estate investing?
There are several ways to find warehouse properties for commercial real estate investing:
- Commercial real estate brokerages: Many commercial real estate brokerages have listings for warehouse properties and can help connect investors with properties that meet their specific criteria.
- Online real estate marketplaces: Several online marketplaces specialize in selling investment properties, including warehouse properties. These platforms often provide detailed information about the properties for sale, including photos, descriptions, and financial data.
- Local government websites: Some websites have information on properties available for sale or lease, including warehouse properties.
- Auctions: Many commercial properties, including warehouses, can be bought at auction; you can find auction schedules and information on properties sold on websites like Auction.com, Ten-x, or Bid-on-business.
- Real estate investment trusts (REITs): Investing in REITs focused on industrial properties like warehouses is another way to invest in this type of commercial real estate. You can find REITs in public stock markets or non-traded REITs. Both can provide exposure to industrial properties and specifically warehouse.
What are some online commercial real estate marketplaces to consider for warehouse property investment?
There are several online real estate marketplaces that you can consider for warehouse property investment. The most popular ones include CoStar, RealCrowd, and Commercial Exchange. But the biggest one of all is LoopNet.
LoopNet is one of the most popular commercial real estate marketplaces, with a wide variety of listings for warehouse properties. You can search by location, size, price, and other criteria to find properties that meet your investment criteria.
How do I find warehouse properties on LoopNet?
LoopNet classifies warehouse properties as a sub-type under the Industrial type. So you’ll start your search and refine from there. In fact, you may want to consider broadening your search to include these other types, as Industrial includes
You can find warehouse properties on LoopNet by following these steps:
1. Go to the LoopNet website (www.loopnet.com) and click “Enter a Property Type”.
2. Select "Industrial" property and enter the location. This can be a city, neighborhood, or zip code. Then click Search.
3. Review your search results and use the filters at the top to refine your search further.
4. Review the filters and update them to what you’d like. LoopNet has warehouse property types and subtypes, including flex, distribution, manufacturing, and truck terminals.
5. When you find a warehouse property on LoopNet that interests you, click on the listing to see more details, including photos, property information, and the contact information of the listing broker.
6. If you have the CREBake Chrome Extension for LoopNet, you can view key metrics to determine if the warehouse property will work for your investment situation. If you don’t, you’ll need to manually calculate whether the property is right for you by considering some metrics described below.
7. Review the listing page. You’ll see an Executive Summary, flyers and offering memorandums (OM), pro-formas, and other information provided by the listing broker.
8. If you have the CREBake Chrome Extension for LoopNet, you can save the listing to a spreadsheet for future review and sharing with your team.
Where does LoopNet show key metrics for a warehouse property?
When considering purchasing a warehouse property for investment, there are several key metrics that you should consider:
Occupancy rate
Look at the current occupancy rate of the warehouse and the percentage of the leased warehouse. A high occupancy rate indicates a high demand for warehouse space in the area and may signify a healthy and stable market.
LoopNet shows you this information under Property Facts as “Percent Leased”.
Income
Look at the current rental income of the warehouse and compare it with similar properties in the area to determine if it is competitive. You should also consider the potential for future rental income growth.
LoopNet may show you the income information, but not always. The broker may have it behind a request form, or may provide the gross income or net income. You’ll need to check the Financial Information section and Property Facts section.
Expenses
Look at the warehouse's operating expenses, including property taxes, insurance, maintenance, management fees, etc., to evaluate the property's overall financial performance.
LoopNet rarely shows you this information. You’ll need to ask the broker.
However, there is a math trick. If you have net income and gross income, you can calculate the expenses:
Net operating income = Gross income - operating expenses
If you don’t have the net operating income, CREBake can help. If LoopNet provides the cap rate and the purchase price, you’ll see the NOI in the review.
Capitalization rate (Cap Rate)
The capitalization rate, or cap rate, is the ratio of net income to the purchase price of the property. It's a way to express an investment's potential rate of return.
cap rate = annual net operating income (NOI) / purchase price
Location
The location is a critical factor. A warehouse in an area with good transportation infrastructure and a growing population or economy is likely in high demand.
Construction quality
Look at the quality of the construction of the warehouse. This can help you evaluate the potential for maintenance and repair costs in the future.
Demographics and Market trends
You should research the local market trends and look at population, employment, and other demographic data. This will give you an understanding of the area's overall economic health.
Tenant creditworthiness
Learn about the creditworthiness of tenants. It is essential to understand the risk of a tenant defaulting on rent; You can do this by analyzing their financial statements, credit reports, and other financial data.
Cash flow
Cash flow is a property's cash generated after all operating expenses have been paid. It is one of the most important factors to consider when buying a property. A positive cash flow means that the property generates more income than expenses and can support the loan payments.
LoopNet cannot show you this information - it's specific to each potential investor, including you. They don't know your financial situation and whether you can pay for this warehouse property in all-cash, using a bank loan that will require a certain debt-service coverage ratio (DSCR), and other details.
This usually means you are doing quick commercial real estate metrics calculations when doing a first review, like what the expected down payment will be, what the resulting monthly loan payments will be, and whether the multifamily property will then be cash-flow-positive. You can use Microsoft Excel to do this or even just a pencil and paper.
With the CREBake Chrome Extension for LoopNet, though, it's all done for you after a quick setup. Click the "Check Metrics" button and it will show you this information. Then click "Save for Later" and it'll put the details into a spreadsheet so you can later compare all of your potential multifamily property investment options in one place.
CREBake helps you find multifamily property investments on LoopNet faster
We hope this walkthrough helps you find warehouse properties on LoopNet. If you want a way to faster analyze commercial real estate properties, including warehouse, but also office, retail, and multifamily properties, try the CREBake Chrome Extension for LoopNet today.