Why light industrial is becoming more popular
Light industrial is a commercial real estate format, a small warehousing space of 500 sq.m to 2,000 sq.m. This type of facility has recently become increasingly popular, especially among small and medium-sized businesses. In Europe and the US, such facilities have already surpassed traditional Big Boxes in terms of demand.
Annual growth in demand for this type of warehousing is due to a number of factors, one of the key ones being the lack of supply on the market for small firms. Until a few years ago, small businesses concentrated their facilities in industrial areas where warehouses could be found for almost any need and at an affordable price. However, active urbanization is forcing more and more of these industrial areas to be given over to house construction. As a result, there is a supply shortage in the real estate market. Another reason for the popularity of light industrial has been the intensive growth of e-commerce. For companies, warehouses have become a necessity.
The units can be used for storing goods and as light production facilities. These units often serve as offices for various businesses or as showrooms. An important feature of light industrial premises is their versatile design, which allows for expanding space or adding engineering systems. The popularity of these properties is also due to their location within the city. Thus, the presence of transport interchanges helps to make relatively quick deliveries to central areas. Often these properties have autonomous communication systems, which are already in place during construction.
Light industrial lease
A light industrial lease makes it possible to locate an office, an industrial facility, or a warehouse in the same location. You can control all business processes in one location – there is no need to travel to facilities scattered around the city.
Small furniture workshops and assembly plants are among the tenants of this property format. Light industrial is an excellent choice for a service station or an order pick-up point for an online shop.
Tenants are most interested in premises measuring between 800 sqm and 1,500 sqm. As for the rates, the rent of such premises is higher than that of warehouses in industrial zones. However, the price is compensated by the location of light industrial premises within the city limits.
Analysts point out that the profitability of such properties has increased by 30% annually for three years. This makes this property attractive to investors. The payback period of the facility is about 10-12 years. Light industrial will actively develop in the coming years. The only factor restraining the sector’s growth may be the supply shortage.