Don’t Miss Out on Warehouse Space for Sale – The Recession-Proof CRE Sector
While the major news headlines speak of an impending recession, commercial real estate investors continue looking for market stability and profitability. That’s why warehouse space for sale in the Columbus, Ohio region has never looked better!
It’s easy to allow the naysayers to overshadow our optimism with the uncertainty of these challenging financial times; however, industrial real estate continues to be one of the hottest CRE sectors in the nation. And according to industry experts (and some of our own in our blog post on warehouses for rent), warehouse spaces will continue to grow for years to come.
An Industrial Warehouse Boom Across the Nation
Like many things in the post-pandemic world, the landscape of the warehouse real estate market has changed. However, unlike many areas of the current economic climate, demand for warehouse space for sale and warehouse rentals continually increases, with new construction occurring in Columbus, Ohio, and across the nation.
What is the reason for this sector’s growth? We can point to increased diversity in warehouse use as one stimulator. Not only is warehouse space needed for manufacturing, but it’s also becoming coveted for e-commerce, data centers, alternative energy, retail, government, medical storage, and even crypto mining. Self-storage warehouse space for sale and rent is also soaring as more consumers reorganize their homes or move to different regions due to the surge in remote work. In addition, self-storage has become a necessity for those who need to live with relatives to consolidate and downsize.
Nevertheless, e-commerce and data centers are responsible for a large portion of warehouse leasing space. With industry giants like Amazon, Google, and Meta committing to multiple new warehouse locations in 2023, the online giants are only some corporations driving up industrial real estate’s profitability.
Lastly, we should also highlight the demand coming from the manufacturing sector. Since the coronavirus pandemic caused international global supply chain disruptions, more US-based manufacturing has grown. As a result, more and more companies are reshoring production materials.
Is Buying a Warehouse a Good Investment?
Buying warehouse space for sale is typically a good investment decision. Leasing out your industrial space can be lucrative if you don’t need the space for your business.
The warehouse real estate industry is currently considered a landlord’s market, particularly in Ohio. Despite five federal interest rate increases in 2022, warehouse real estate has become a safe bet compared to other sectors. And, rates in Ohio have risen slower than other comparative markets, making our region more desirable.
If you don’t plan on using the industrial space for your own business, you can offer your warehouse space to rent. Your investment can yield high returns due to steady rent growth, demand, and profit margins. And by requiring that your tenant pays for all operating expenses, you significantly reduce overhead management costs! As such, warehouse space for sale is as close to a “recession-proof” investment as you can get.
Consider this: New warehouse construction will not soon meet the increased demand. Meanwhile, vacancy rates are consistently 3%, dropping to 1% in extremely high-demand areas like Columbus, Ohio; here, 30% of warehouse spaces are leased, even before the building is complete.
Understanding the historical precedents when considering commercial real estate investments is also essential. Warehouse demand during an economic recession has typically stood firm due to support from State and Federal governments. Investment in a warehouse-based industry is one of the best solutions to recession reversal because it keeps people employed and supply and demand stable. Therefore, it’s safe to assume that warehouse leases won’t hurt, even during rocky economic times.
Should I Lease or Buy Warehouse Space?
Since we mentioned leasing, we should tackle whether leasing or buying warehouse space can be wise in the current market. Both options have advantages and disadvantages and depend on your budget and goals. This notion applies to all commercial space for sale or lease.
Renting a warehouse space is less risky; while you will be paying a monthly lease fee, you will save on a down payment and maintenance fees. Warehouse space for lease also provides the ease and flexibility to leave the property. Small- to medium-sized businesses often opt for a warehouse to lease.
Buying warehouse space provides you with equity in the property. Based on recent history, the value of warehouse spaces appreciates over time. Warehouse space owners also benefit from the option to give property tax responsibilities to the tenant through a triple-net lease; however, as the property owner, you have the final say in what happens to and on the property. There is also great potential for passive income by renting warehouse space for lease. Large-sized businesses often opt for a warehouse to buy. And buying a space larger than your needs allows you to lease out a portion of the building, lowering overhead costs.
Did You Know Columbus, Ohio Is Ideal for Warehouse Investment Properties?
Columbus, Ohio, has always been the perfect hub for industrial real estate. Geographically, Columbus has direct access to major freeways, allowing manufactured goods to ship to 47% of the US population within 10 hours. Shipping ease has only increased in demand after the nightmare supply shortages of 2020.
In addition, Columbus, Ohio is convenient for many corporations to base their warehouses due to its easy access to major shipping routes, the low price of land for sale, and the lack of severe natural disasters that could stall shipments.
E-Commerce Is Already Here
Columbus, Ohio isn’t immune to the changing landscape of warehouse space for sale. Ohio is already home to 50 data center warehouse facilities owned by technology and retail giants like Honda, Amazon, Google, and Meta’s Facebook, with Intel and Cologix moving into the area soon. Intel recently announced that it would build a large microchip manufacturing plant, a staggering $20 billion investment. Cologix, a Colorado-based company, recently decided to construct a massive data center worth an estimated $152 million. Honda, already a strong presence in Ohio, has committed to building a new EV battery plant with an initial investment of $3.5 billion. And Amazon alone is adding another 50 warehouse locations in 2023.
A whopping 59 million square feet of warehouse space has been added to Columbus, Ohio since 2012, with another 12 million under construction. E-commerce and data centers are projected to continue driving up warehouse space demand, which in turn causes the value of those properties to skyrocket. Data centers need large-capacity warehouse spaces with modernized electrical grids. The newer warehouse properties are built with modern accommodations and attract tech and e-commerce giants. The industry growth in Columbus, Ohio makes it an ideal city for these vast data centers to be based.
Corporations Want Sustainable and Affordable Warehouse Properties
Another attractive aspect of the Columbus region is Central Ohio’s reliable and lightly regulated power market. As sustainability becomes more meaningful to corporations and consumers, alternative energy sources have become more appealing to business owners and company executives. Flexibility in these energy sources, as opposed to tighter regulation in other states, allows corporations to achieve sustainability goals that are desirable to the end consumer.
Nevertheless, warehouse space is only useful if corporations can find employees to staff them. Despite nationwide staffing shortages, Columbus offers a labor pool that continues to grow with an influx of new residents from other parts of the country and naturalized US citizens.
Seize the Day and Invest in Warehouse Space for Sale
Successful commercial real estate investments often boil down to recognizing the right time to invest. An intelligent investor watches for commercial real estate markets that are in high demand, have low relative entry costs, and include stable profit projections. All those factors align with the Columbus, Ohio warehouse real estate market. And the time to invest is now.
Are you interested in warehouse space in Columbus, Ohio? For almost 85 years, The Robert Weller Company has provided expert advice and on-the-ground knowledge to help our clients make a suitable CRE investment in commercial space for sale and lease. Get in touch with us at 614-221-4286. Receive the white-glove treatment you deserve while gaining incredible warehouse space investment intelligence not found anywhere else.