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Investor Guide to Buying Warehouses in Florida in 2022

Published: 03-15-22 Category: Investing

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

The pandemic and now post-pandemic era taught the commercial real estate multiple lessons, but above all: don’t knock the classics.

While so many within the CRE world are looking for the next big thing that’s completely unique, so many seasoned professionals are beginning to realize that it’s the classic assets that are a great fit for the portfolio rather than super speculative projects.

The old saying that there’s nothing new under the sun truly makes sense in the commercial space; the knockout wins come from making the most out of the classic asset types, not necessarily trying to reinvent the wheel.

Warehouses: The Tofu of the Commercial Real Estate World

Tofu is a staple food all around the world, but this soybean sensation is pretty bland on its own. Most chefs will make a big deal about how tofu is prepared because otherwise, cardboard is more appealing. Sorry, tofu fans.

But in their own way, warehouses carry this odd brand of versatility. Just as tofu takes on the flavors the chef uses in the dish, warehouses are blank canvases perfect for any commercial property strategy.

According to JLL Research, Florida alone had over 490 million square feet of warehouse and industrial space. That’s a lot of opportunity for portfolio diversification or introducing new asset classes for clients to sink their teeth into.

Opportunity Knocks Through Warehouses in Orlando

Orlando is a key city in Florida for manufacturing, logistics, professional services, and more. The city has a dynamic economy that only continues to grow. The supply chain issues of the pandemic era have to be solved by taking new approaches to logistics, which in turn means getting good warehouse space.

It isn’t just about having somewhere to process goods; the location matters just as much as the total square footage.

Simply put, getting goods to other areas requires having warehouse space that’s strategically located, easy to access, and suitable for a wide range of purposes. Looking at a warehouse for sale in Orlando is an ideal way to start because the inventory is strong, and many property owners have already invested in the functionality of the warehouse space.

Get Plans in Motion to Use the Warehouse to the Fullest

A warehouse only comes to life if there’s a plan in place to make the most of the space. Here are a few ideas to consider when it comes to warehouse houses for sale in Orlando, as well as any other hot destination:

Logistics. Building leases for e-commerce, shipping, and supply chain-oriented companies is a great way to have ongoing income without a lot of heavy lifting.
Urban garden initiatives. A co-op devoted to turning indoor spaces into modern greenhouses is a different approach to a classic problem: how do we grow more food and make it accessible to people?
Event space. The modern warehouse can turn into a large event space, and events are making a comeback in the post-pandemic era.
Multifamily units focused on quiet, affordable spaces. Renovating a warehouse for lofts is growing in popularity, and young professionals are willing to trade losing a few amenities in order to have access to fun, social spaces.

Lining up financing will require studying what your plans are for the building, so figuring out exactly what the vision looks like becomes important right from the beginning.

The Renewed Importance of the Walkthrough

Buying property from out of your home area is a little tricky because you can’t look at it. You’re going off just the data that you have available. However, is this the only way to purchase commercial real estate? Absolutely not.

The walkthrough is more important than ever because a visual inspection can reveal a lot more than just photographs.

The condition of the property is a strong indicator of its value. A property that requires additional renovations or protracted maintenance is a property that should be a bargain. Indeed, raising the point of repairs with the seller is key in seeing what can be negotiated.

It’s all negotiable, but it really does start with a good walkthrough. Just like any other service, walkthroughs are often handled by other members of a real estate team. Investors who outsource understand that they don’t have to make all of the decisions themselves; they just need to work with people they can trust.

A Few Points About Financing

Financing warehouses are similar to other types of commercial property. While the financing process does involve a lot of paperwork, the silver lining is that warehouses are not a difficult concept to explain to any lender. They have versatility, true, but they aren’t extremely complicated.

Like any other purchase, lining up your financing before moving forward makes it clear that you’re a serious investor. For sellers that have multiple points of interest for their warehouse, having financing ironed out can put your offer at the top of the list.

If you’re going through a lender, having a solid downpayment and credit are becoming incredibly important. Lenders have a long history, and real estate crashes have caused lenders to become more conservative.

Still, seeking financing is still a matter of having creditworthiness, a plan, and reaching out for the financing in the first place. Don’t overlook local incentives to have vacant warehouses turned into functioning spaces again; that can lower the amount that you’ll need to finance.

The Road Ahead for Florida Warehouses

Multiple use cases for warehouse space exist, including pursuing triple net leases, transforming the space for multiple tenants, or even using the warehouse to support other business initiatives within your company.

Will warehouses be the best fit for every investor? Not at all. However, if investors are hunting in 2022 for something classic, versatile, and solid, the warehouse should be at the top of the list.

Navigating lease agreements for warehouses is a great way to get started after purchase; letting the tenant handle the day-to-day operations and sending the rent to you can be a strategy that is much lower in risk than running anything yourself in the warehouse.

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