Industrial properties is a generic term that covers many different categories of commercial spaces. Each category can be generally defined by how those properties are used. The different use cases lead to very different building requirements, meaning an ideal property for one category can be utterly dysfunctional for the next. To help illustrate this, let’s take a closer look at the three main categories (and their seven subcategories) of industrial buildings in commercial real estate.
Category 1: Manufacturing Properties
Manufacturing properties are used for the manufacture or assembly of products. Because manufacturing tends to produce substantial noise and activity, there are special zoning requirements for these buildings. An experienced broker is key for navigating these requirements and ensuring the building you buy, lease, or construct will work for your specific plans.
Of course, not all manufacturing operations have the same requirements. However, it’s important to note that the category of manufacturing properties can, and often is, broken down even further by specialty.
1. Heavy Industrial Buildings
Heavy industrial properties house the operations for producing goods and materials. Many of these properties contain heavy-duty equipment, extensive machinery, heavy power and likely significant parking given the larger number of employees versus other industrial uses. They also routinely have substantial HVAC and related specialized improvements (air lines, heavy water usage/supply, floor drains, make-up air, etc.) Types of products produced can vary greatly.
Certain heavy industrial operations, due to noise, pollution or nuisance to neighbors may be even further removed from other uses or allowed only in certain zoning districts. For example, steel production and a packaging manufacturer may have a lot of similar needs, but one may more seamlessly blend into an industrial park.
2. Light Manufacturing/Assembly
Light manufacturing and assembly properties also deal in the manufacture or assembly of goods and materials but do not have the extent of specialized improvements that more heavy industrial users require.
Compared to heavy manufacturing properties, light manufacturing and assembly facilities tend to require less energy and less space – particularly vertically. They also tend to require less specialized improvements, which can make finding new tenants easier.
Category 2: Warehousing and Distribution Properties
Warehouse and distribution properties are used for the storage and distribution of both raw materials and finished products. These spaces will often commonly have some portion of their square meterage dedicated to offices, usually less than 20%.
3. Distribution Centers
Distribution centers are built with high clear heights as these users typically look at efficiency through cubic volume of a space and a space’s ability to store goods vertically, rather than the square meterage or footprint that may be of greater concern to a manufacturer laying out equipment.
Additionally, these facilities are built with lots of dock doors so they can accommodate loading and unloading simultaneously. They’re used to store bulk quantities of products, making them an intermediate step between manufacturing and delivery. This is often the type of property people think of when they say industrial real estate.
4. Truck Terminals
Truck terminals are considered a kind of warehouse, despite the fact they’re not usually used for storage. Also known as ‘cross dock’ facilities, they’re used for quick unloading and loading of trucks. The products moving through them stay for very short periods of time, just long enough to be transferred between trucks as a key part of distribution networks.
The semi-trailer and box truck traffic that truck terminals generate makes traffic management design especially critical during their construction.
5. Cold Storage
Cold storage properties are used to store temperature sensitive products such as foods or pharmaceuticals. These buildings need to be built with superior insulation and HVAC systems to maintain their cold temperatures. They also benefit from advanced humidity control and emergency backup systems, which help ensure uninterrupted optimal conditions even during unexpected events. These system requirements mean the energy demands for cold storage facilities tend to be markedly higher than other types of storage and distribution properties.
Category 3: Flex Properties
The term ‘flex’ is used in commercial real estate to describe an industrial-zoned property that’s used, in part or in whole, for purposes other than the two categories described above. It’s appropriate to consider it more of a catch-all term than a specific use-defined category of industrial buildings.
6. Flex Spaces
Industrial properties classified as flex are truly what the name implies – flexible. They usually contain a decent amount of office space in addition to some or all of the components of assembly, warehousing, distribution, tech, etc. These types of industrial properties are most common around Cape Town and suits various industries, mostly smaller distribution companies that either imports or assembles products under license. The majority of buildings in the Flex Space category fall between 300 and 600 square meters, has one roller shutter door for deliveries and receiving, small office component and limited parking or yard space.
7. R&D
Research and Development (R&D) properties exist for every industry. In Cape Town, these properties typically serve Medical and or Labarotory uses. These buildings fall into the overarching flex category, but typically have additional specialized needs such as:
- Clean rooms
- High power requirements
- Specific HVAC requirements
These types of industrial properties are among the most niche on the market, often being custom-built for a client or requiring extensive improvements.
Work with Experts in Industrial Real Estate
Some businesses will have a need that fits into more than one of the above categories. Understanding their need deeply, the costs of each building type (lease or purchase), and the total cost to improve said property are crucial to navigating the Industrial market and finding the right property.
That’s where we can help. At Assetpoint Real Estate, we have decades of experience helping industrial clients find, rent, buy, and build the optimal facilities for their business and growth. If you’re ready, we’re here to help. Get in touch with Assetpoint today.
