Why Invest in Industrial Real Estate?

The industrial segment of commercial real estate has many attractive benefits, making it an excellent location for financial investments. Particularly, the property used for industrial use is considered industrial property (warehousing, manufacturing, storage and logistics, showrooms, etc. ).

Appreciating Investment

Although every sort of investment has some degree of danger, industrial real estate investments tend to be less volatile than other kinds of investments. When analyzing this result, a few things should be kept in mind.

Consistent and Predictable Cash Flow

In most industrial real estate projects,like in Cushman & Wakefield Atlantic Commercial Real Estate, the single-tenant lease is an accepted norm, except for Flex industrial properties, which are almost always multi-tenant. These leases may last up to 20 years, and there are several ways to extend them. In addition, an annual rent increase is usually a part of the contract. An investor’s cash flow is more stable and predictable when leases with a long term have yearly rent rises.

Inactive Investing

Triple-net or double-net (NNN) leases tend to be the most popular in industrial real estate, which is to say that the landowner does not have any involvement in the running or management of the building. Except for structural elements such as the roofing structure, the tenant is generally accountable for the entire cost associated with using the building per an NNN lease. This includes things such as the cost of insurance as well as property tax. When a tenant signs a lease that is NNN, they take on responsibility for all of the operational costs of the building, which includes the cost of any structural repairs or maintenance that may be required. The tenant is entirely responsible for any necessary upkeep or repairs to the rental property.

Returns on Investment/Distributable Cash Flow

Investment in a commercial real estate for sale in Fredericton provides higher net return and more excellent cash flow distribution because of the combination of rising, predictable, steady cash flows and the tenant’s responsibility for most (but certainly not all) expenses related to operating or maintaining the premises. A preferred annual return between 8 and 10% is rare, and yearly returns of 15% or higher aren’t expected either.

Diversification

One of the numerous advantages of investing in Saint John commercial real estate for industrial purposes is its potential for growth and diversification in the future. Investing in industrial real estate might lessen your overall risk assessment due to its unique characteristics. It is feasible to construct a secure financial portfolio by investing in a wide variety of reputable commercial properties in various economic sectors and geographic areas around the country.

Tax Advantages

If we were talking about the benefits of industrial real estate investment, we would need to consider the potential tax benefits. Real estate is a tax-advantaged investment for all. Real estate used for industrial use is not any different. Asset depreciation can be applied to any commercially-owned industrial real estate. In the case of industrial and commercial properties, depreciable assets can provide significant tax benefits. Depreciation is a non-cash expense; therefore, it’s vital to keep track of it. There’s a paper loss when paying taxes; however, it doesn’t impact the business’s cash flow. Paper losses can lower tax-deductible gains from selling other assets in certain instances.

Capital gains are realized when an investment is stored for a lengthy period. If an asset is sold, profits are taxed according to long-term capital gains rates rather than at substantially higher rates of capital gains in the short term or on earnings. The new zero-percent long-term capital gains tax rate established in the Tax Cuts and Jobs Act of 2017 is even more favorable to smaller investors.

Conclusion

Due to its constant cash flow, better yields, fewer maintenance needs, long-term tenants, and unique tax advantages, industrial real estate is a valuable asset investors should seriously consider as part of their portfolio.