There’s office space. Fairly straight forward. There’s retail space. Yep, that makes sense. But then there’s “industrial space.”
If you need a great commercial space for your business, and you don’t think office or retail fits the bill, you probably need an industrial space. But what, exactly, does that entail? Will you just be stuck with a dusty, barren warehouse with zero amenities? Actually, no.
Today, let’s do a quick review of what industrial real estate is, the different types of industrial spaces, and local businesses that fit each building type.
What is Industrial Real Estate?
Industrial real estate typically describes properties where goods are made, stored, and/or shipped. There are at least eight industrial building types, divided into three main categories: manufacturing, storage and distribution, and flex space. However, buildings can function as more than one type, depending on the needs of the business inhabiting the space.
Every city has zoning ordinances taking industrial properties into account. That makes industrial real estate a different commercial real estate specialty than office or retail sectors. Having an agent well versed in industrial real estate is key to securing the right space for the right price.
Here are the different types of industrial real estate:
A manufacturing facility, simply put, is where goods are produced and assembled. These industrial building types are defined as being less than 20% office space with loading docks for trucks and clear heights of at least 10 feet. There are two types of manufacturing buildings: heavy manufacturing and light assembly.
Heavy Manufacturing Buildings
Heavy-duty goods, such as cars or outdoor equipment, start their life in a heavy manufacturing building. These properties can be as large as hundreds of thousands of usable square feet. They usually contain heavy-duty (and often customized) equipment, three-phase electricity, and a lot of loading dock space. Depending on a company’s needs they may also have user-specific drainage, ductwork, ventilation systems, chemical lines, etc. When heavy manufacturing buildings change hands, they usually require top-to-bottom renovation because of the permanent fixtures often needed to perform specialized heavy manufacturing. Locally, the GE Aviation plant would be a great example of a heavy manufacturing building.
Light Assembly Buildings
Less massive manufacturing can take place in a light assembly building. These properties are smaller and easier to reconfigure when they change tenants. That’s because the equipment used is more portable, relatively speaking, and the parts being assembled are smaller, as well. These buildings may also include a storage component to house the goods until they are shipped. Mathis Electronics in Asheville assembles printed circuit boards and is an example of a manufacturing company that would work well in a light assembly building.
Storage and Distribution Buildings
As you would guess from the name, these are buildings where products are stored, and from where they are shipped to the end user. These are mostly one-story buildings with high ceilings, multiple loading docks, and concrete truck courts. The sizes of these buildings can vary dramatically, but they also feature less than 20% office space by square footage. The remaining 80% is dedicated to storage space. There are three types of storage and distribution buildings: distribution warehouses, general warehouses, and truck terminals.
If you’ve assembled your goods in a manufacturing building, the general warehouse is where those goods are stored. Because goods are stored for longer periods of time, location isn’t typically an important factor. Neither is the door-to-square footage ratio, since products aren’t being moved in and out as often. Instead, variations in space and pricing are a result of how warehouses are equipped. For example, cold storage facilities are equipped with freezers and require seals on their docks and insulated overhead doors to keep the products cold. LS Interior Design in Biltmore Village has a warehouse where they store inventory and stockpile merchandise.
As the name implies, a distribution warehouse is primarily used to ship goods. That means their location is a key component of the business model. As a result, these properties tend to be located close to airports and other transportation lines. National companies often locate in the middle of the country, equidistant to their buyers. For example, Amazon occupies several custom-built, high-tech distribution centers around the country, like the one coming to Mills River. This allows them to fulfill their orders quickly, regardless of where the buyer lives.
Truck terminals have the least amount of storage space of these building types. Instead, they serve as intermediate sites where goods are moved from one truck to another. Since these sites are devoted to transportation only, they are more focused on features convenient for distribution.
Flex Space Buildings
Other types of industrial buildings are termed “flex spaces.” These properties are specially designed to serve multiple purposes, and can be customized to the business’s needs. Office space usually occupies more than 30% of these buildings. And they also tend to have more parking than other industrial buildings, making them a better fit for startups wanting to save on office rent. There are three types of specialized flex properties: research and development, data centers, and showrooms.
Research and Development Buildings
R&D is the process by which companies create new products and improve existing ones. Companies need specialized spaces to create and test, which may include everything from clean rooms to light manufacturing space to open square footage. The products stored are for testing purposes only. Nowadays, many R&D spaces are converted to campus-like business parks with shared architecture design, lots of surface parking, and well-landscaped, open spaces. Locally, Thermo Fisher Scientific is a great example.
A data center is where a company keeps the equipment it uses to maintain network connectivity and store its data (or the data of its clients). These spaces tend to be very large, averaging at 100,000 square feet. Data centers require special wiring and cooling systems, as well as reinforced floors to hold the weight of the equipment. These buildings almost always include backup generators, as well as extensive security systems. By far, the best example of this locally is NOAA’s National Centers for Environmental Information. NCEI hosts and provides public access to more than 37 petabytes of comprehensive atmospheric, coastal, oceanic, and geophysical data.
Lastly, showroom properties are a combination of offices, warehouses, and formal showrooms. In most cases, at least half the space is used for showcasing and selling products. The most common type of industrial building in this category is a car dealership. Many furniture and home fixture and appliance companies, such as Ferguson Bath, Kitchen & Lighting Galleries in Asheville, also have showrooms.
Ready to Find the Perfect Industrial Space for Your Business?
Understanding the various industrial building types available is just the first step to finding the right space for your business. Luckily for you, your commercial real estate agent is by your side to help with the remaining steps.
NAI Beverly-Hanks continually strives to be the best in the business and provide you with the expertise you need. Contact us today to speak with an NAI Beverly-Hanks commercial real estate agent about securing the perfect industrial space for your Western North Carolina business.
2 Responses to “8 Industrial Building Types and How to Decide which is Best for You”
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