Learn how industrial warehouse buildings are getting premium values.
Many people watch the real estate market, making buying or selling decisions based on the belief that it is a “buyer’s market” or a “seller’s market.” But the reality is, even in the lucrative commercial market of the San Fernando Valley, anytime is a good time for buying or selling, if the deal is right. Of course, the best way to get a great deal anytime is through a commercial real estate agent.
Further, Los Angeles in general and specifically the San Fernando Valley market constantly offers opportunities for buyers, sellers, and investors. You can always expect your property value to appreciate over the long term, no matter where it falls on the spectrum of residential or commercial. If you are looking for industrial real estate or hope to sell now, with an experienced commercial real estate agent you can find the right deal.
Is this a good time to buy or sell in the commercial real estate market?
Below, we look at some expert techniques for deciding when to buy or sell your industrial property, such as a warehouse.
Timing Transactions to the Market Is Tricky
No matter what the market is doing, the best time to buy or sell is now. The savviest investors can find excellent opportunities, whether during a downswing or upswing. Commercial real estate agents and their commercial brokerage have access to the right people at the right time for you to find your ideal warehouse or other industrial property. The same is true if you are selling, with buyers and investors always being only a phone call away from an experienced agent for the right deal.
Buy or Sell According to Your Own Financial Status, Not Everyone Else’s
You know whether you can afford to buy an industrial property now. Likewise, if you own a warehouse or other commercial property, you know when you should sell. Do not wait for the right deal to find you when the market is booming and according to “expert insights.” Find the right commercial real estate broker to get a deal done when you want or need it most.
Avoid Short-Term Financing
When buying or selling a property, view the transaction from all angles. Run every scenario through your mind to stress-test “what ifs.” One of the biggest mistakes people make when buying is short-term financing. As the coronavirus pandemic proved, you never know what world events or downturns are just days, weeks or months ahead.
Seek an Expert Commercial Real Estate Agent in Your Market
You need a local expert for your commercial real estate transactions, such as a warehouse or other industrial property. Find your own local expert in a commercial real estate agent or commercial brokerage. Your expert will have access to the best properties for your return on investment or the right buyer to get your best deal done. In the process, analyze their data and use their knowledge to your best advantage.
Still, Pay Attention to the Market and Economy
The pandemic of 2020/2021 is a great example of how world events can change commercial real estate markets. While anytime is a good time to buy or sell if you have the incentive to get a deal done, market fluctuations do matter. The Covid-19 situation most affected the industrial and warehouse market. Industrial is booming because of the pandemic-associated shift in direct-to-consumer buying. At the same time, permanent store shutdowns are rampant and shopping centers have sparse traffic. The pandemic created this competitive boom in industrial buying and leasing at the same time as retail properties are standing empty everywhere.
You Can Never Fail with Flexible and Reusable Properties
If your commercial real estate broker finds or lists properties with potential for changing use, you can buy into a great deal. For example, if a large warehouse in the San Fernando Valley can repurpose into use for a film studio or other local industry, you will experience fewer effects in a particular commercial sector downfall. If the ecommerce boom suddenly breaks down, you can lease the property to a different industry. This is particularly true in the San Fernando Valley where multiple industrial sectors are on a growth curve.
How Industrial Warehouse Buildings Are Getting Premium Values
Industrial warehouse buildings are among the hottest real estate commodities today, thanks in large part to the recent booms in ecommerce and legalized marijuana. With so many businesses transitioning all of their sales online, including within the realm of marijuana distribution, consumers are growing more accustomed than ever to clicking-to-buy. This means businesses once relying on costly retail space can now streamline into more warehouse square footage and fewer showrooms. One of the largest benefits of this transition is the bang you can get for your buck, when comparing industrial space to retail.
With seemingly everyone in the commercial world seeking industrial properties, values of these properties are certainly increasing. If you have a warehouse to sell in the San Fernando Valley of Los Angeles, now is a great time to get the price you want.
If you need space to buy or lease, you are also in luck. With these spaces going at a premium and other types of commercial properties emptying out at the same speed, warehousing is popping up even in unexpected places. An experienced commercial real estate agent can find your new warehouse property in non-traditional spaces like vacated shopping centers, office buildings and even old golf courses.
In fact, nationwide demand for big-box industrial properties, warehouses and distribution centers over 200,000 square feet, hit record levels in 2020. This is the most popular type of business for any commercial brokerage today. This is certainly true in the San Fernando Valley and throughout Los Angeles. Just under $350 million in industrial property transactions took place in 2020, despite the pandemic. This was a 25 percent increase over the same sector in 2019.
Will the industrial sector of commercial real estate continue to boom?
Although the rate of ecommerce growth will slow down post-pandemic and as shoppers return to stores, the market will remain competitive. The landscape of consumer business has greatly changed with ecommerce and industrial real estate being the big winners.
Even Amazon is getting creative in their warehousing. In Clay, New York, the ecommerce giant transformed a golf course into their regional distribution center. Now, they are looking for golf courses for the same purposes in other markets, such as Tennessee. They also seek empty shopping malls for direct-to-consumer warehousing and distribution.
Other companies are seeking vacant office buildings for warehousing as more businesses adapt to work-at-home employment policies. Those on the lookout for more industrial space include TJ Maxx and Ross Stores, Burlington, Wayfair, Home Depot, meal kit companies and grocers. The Gap is building a distribution center of 850,000 square feet for their Old Navy eCommerce operations. Williams-Sonoma is also expanding its industrial footprint by 20 to 30 percent in the next year. For this, they seek two million square feet to add to their manufacturing and distribution portfolio.
With more grocers and meal kit companies experiencing ecommerce booms, Americold temperature-controlled warehousing has enjoyed share increases of 15 percent in the past year.
Clearly, as retail properties suffer low demand and dropping rents, industrial real estate is a lucrative market in the San Fernando Valley. This is true, whether you are selling or competing for an industrial property of your own. The key to your ideal transaction is in your own hands. It relies primarily on having the experienced help of a local San Fernando Valley commercial real estate agent.