Asset Class Guides

Industrial Real Estate Investing Explained

Industrial real estate generally covers warehouse, distribution, manufacturing, and flex property, and the North Texas market around Dallas, TX has generally seen substantial industrial development tied to its central location, highway and rail infrastructure, and role as a logistics hub for the broader region. Industrial underwriting generally focuses on clear ceiling height, dock door count and configuration, trailer parking capacity, column spacing, and proximity to major highways, since these physical characteristics generally determine which tenants a building can serve, ranging from big box distribution users to smaller last mile delivery operators. Industrial leases are commonly structured on a triple net basis, with tenants generally paying taxes, insurance, and maintenance directly, which generally produces a relatively passive income stream for the landlord similar to net leased retail property. Industrial real estate held for investment or business use is generally eligible for 1031 exchange treatment, and the asset class has been a common exchange destination in recent years due to strong tenant demand tied to e-commerce and supply chain reconfiguration, though underwriting should still account for submarket specific supply pipeline and tenant concentration risk. Flex industrial property, which generally combines warehouse and office space within a single building, offers a different tenant profile than pure bulk distribution space and generally appeals to smaller users needing both operational and administrative space. This page is general education, not investment advice, and specific submarket supply and tenant demand conditions should be researched before acquiring industrial property.