Industrial vs. Multifamily

Multifamily and Industrial have long been darling asset types. Consider the following benefits of each:

Industrial

• Industrial is appealing because it is simple: industrial tenants often want to lease an empty building. In other words, they don't need an expensive and customized buildout; they are the opposite of retail and office properties.
• Ceiling height, clear span, drive-in doors, loading docs and outdoor storage are what industrial tenants want and the building either has these or it doesn't. Consequently the path to leasing is simpler: take it or leave it.
• As e-commerce has risen in prominence, it is warehouses that support the shipping distribution process.
• New industrial outdoor storage (IOS) is often no longer supported by zoning codes yet a multitude of businesses continue to need these facilities for their operations. As a result, the demand for existing IOS properties is high.

Multifamily

• While the trend towards remote work has harmed the demand for office space, everyone still needs a place to live.
• Housing continues to become more expensive and, the longer it takes for one to save to buy a home, the longer one must continue renting.
• Our mobile society has shifted geographic demand for housing. As a result, multifamily in sought-after locations has skyrocketed in demand over the last fifteen years.
• Multifamily often have one-year leases allowing landlords to quickly reset rents in hyper-inflationary periods.

Of course there are drawbacks too: industrial has been overbuilt in recent years, quelling demand, and there is no more management-intensive asset than multifamily. If you are considering investing in a new commercial real estate asset type, let's discuss the pros and cons so that you can make an informed decision about what will help you best achieve your goals.