Page 30 - IreitEbook

To be fair, that isn’t always management’s
WHAT YOU NEED TO
fault, since there can be a two-year lag or
KNOW ABOUT
more between assessing an area’s growing INDUSTRIAL REITS

needs and having a completed building to
Industrial property (used as
offer in that location. And, let’s face it, a lot
warehouses, light manufacturing, and
can change in two years.
research and development facilities) is

among the most stable, least- volatile
A lot has certainly changed in the last two
real estate asset classes in the United
decades – changes that, thirty years ago,
States.
nobody saw coming.

Occupancy is simply not a problem in
For example, the ability for traditionally
this neck of the real estate world, with
office-bound jobs to not be so office-
88%-92% of appropriate buildings
bound after all has definitely forced office
leased out at any given time. Better
REITs to rethink their business models. So
yet, when new buildings go up, it’s
too have businesses’ specific cost-cutting
because the country’s gross domestic
attempts, including densification.
product (GDP) has gone up.

Densification is the trend to pack more
The more demand for consumer
people into smaller spaces. Back in 2000,
goods, the greater the need for
employers generally budgeted 250 square
warehouses to store and distribute
feet per employee. But by 2015, that
them. This is true no matter if those
number had dropped to an average of 175.
offerings are being purchased online
While the tendency has since seemed to
or at traditional malls and shopping
taper off, it’s doubtful that it will go so far
centers.
as to reverse any time soon.
Businesses need space to store their

supplies no matter what.