I was an industrial developer in New Jersey for 15 years. I had no idea that industrial real estate was such a safe haven.
Well, congratulations to you... I am willing to say that you may be a little hard headed since New Jersey strikes me as a place where I would like to move away from, not stay in... But hey... it is a free world...
Did I say that industrial real estate was free of risk ? i.e. "such a safe heaven"
Answer = NO
I said...
However... If you are interested in protecting your equity now that the market has given it to you...
You could exchange into a more stable "type" of real Estate. True, if you stay on the residential single family residence type your risk exposure changes little. On the other hand you could consider something more in line of "commercial real estate"
Message 20271028
Does that mean RISK FREE HEAVEN...
NO
I merely made a suggestion, but in this idiotic universe, aka SI, the Theatre of the Absurd, such is grounds for your type of post, i.e. moronic, condescending and nonsensical.
My post also assumes the use of some common sense... i.e. if the essence of the "suggestion" indicates "to protect the earned equity" then... Would I invest in a dead stale industrial market such as New Jersey (which I confess not to know the first thing about)?
Answer = Most definitively NO
The common sense thing to do would be to invest in a market that growth potential exists, and the risk is well diversified ad spread (i.e. 3 - 4 units (given the equity at hand)... and yes,,, it requires some basic research...
I guess that massacre back in the late 80's/early 90's was just a dream, as were the thousands of buildings whose keys were handed to lenders.
Exactly, what are you saying/implying ? ...that my post has not considered the possibility that your reference will happen again ?
Read above... the part about the use of common sense...
The reality is, I have no idea. I do not have a crystal ball telling me the future. As to the keys handed to the lenders... well, what sort of leverage did they use? The concept of OPM is fine, however it carries risks, and so in that instance, the risk materialized and so they should have taken that into account... I am not a baby sitter. If you borrow, you must make sure you will re-pay.
I have been investing in real estate longer than your 15 years of developing experience and I have seen all sorts... The one thing I have learned is not to listen to whaling hyenas announcing to the world that the sky is falling and the end of the world is near...
What I do pay attention to is the market and the necessary research that it is required to figure out what the next turn MAY BE as sure as hell I do not know FOR sure what will happen next.
Industrial rents in New Jersey are just now approaching what they were in the mid 80's. The problem is that land costs are higher, building costs are higher, and clear heights on new buildings have increased from 24' to 32', further driving up costs.
Indeed, not to mention the need (or requirements as the case may apply) of oil & water separators, fire sprinkled buildings and other sundry requirements to meet EPA codes, specific uses (i.e. paint booths, dust extractors and so on). The price of steel has had a tremendous impact in recent building costs and whether you believe me or not, I had a 49% benefit because I just happened to buy a chunk of it literarily 5 days before they announced a 35% increase, then an additional 5% (and to top it all, they had given me a 5% discount based on volume -LOL-
My impression is that east coast and mid west industrial properties might be less desirable as competition is greater and many of these locations have suffered from migration away from the 'rust belt' syndrome...
At some point cities such as San Diego, San Francisco, Portland and Seattle offered a combination of relatively stable growth, strong demand for industrial space and good quality of life... all in one.
Since I lived in some of such areas, things have changed quite dramatically. Today, there are better locales for the flex-incubator type of building I happen to like
I'd be interested to know what some of the unleveraged yields are on your holdings, and where they are.
You may be interested in Nirvana as well... LOL. However that does not mean I have to tell you one iota of my personal stuff, particularly with the condescending tone of your post. -typical SI moron-tone. If you had a different attitude, I might have volunteered via PM some data that would give you a better clue.
FYI...
I can tell you that there are markets in the small to medium size towns/cities (i.e. 50,000 population plus) along the 'inland regions - mountain states' whose leasing rates are higher than markets such as Seattle (to mention one). Not only that, in addition, leasing markets are quite strong(er), albeit somehow less sophisticated (i.e. only now the concept of nnn is beginning to be accepted)
These markets have been primarily fueled by a migration of businessmen/individuals who are running away from overcrowded cities and overregulated environments run by overzealous bureaucrats who believe hey can milk companies and individuals to no end... with the end result of running companies out of town (i.e. Seattle - Boeing - who moved their headquarters to Chicago, and in the process have flooded the industrial market with empty warehouses)
Luckily for me, I do not deal in such market as my focus is the multi-tenant flex industrial buildings... slightly different animal than the cement box large capacity buildings. True, it is more management intensive (a relative term) but the risk is FAR better spread.
My theory is that these migrating people have brought their businesses to smaller towns searching for a better quality of life and in so doing have created a building boom as construction simply exploded in similar locales to meet housing demand. This in turn has created the need for the very industrial space I like to dwell in i.e. multi-tenant flex (sometimes referred to as incubator suites).
I believe some time ago I posted some information from Grub & Ellis that addressed this issue...
As for my returns... I am doing very well, thank you very much, some of the tilt up buildings are the most superb investments I have made, those things are indestructible, (short of an earthquake, which I have insurance for anyway, and NO, they are NOT in California)... Maintenance is relatively simple, they just keep on spitting cash out rain or shine, better yet, you deal with businessmen, [as opposed to in apartments where you deal with whiney people whose implied ally in the form of city ordinances and laws favor the non payment of rent]...
Unfortunately, as you indicate, building costs are simply getting out of line.. So steel structures (with better architectural designs) are now making more sense... (Then again.... the recent price increases may change that all over again....
An additional element to this mix are mini storages... in the past, considered the ugly duckling of real estate investments, shone away by stupid bankers who did not know the difference between their arse from a hole in their head... now, sought after by many and borrowing is not an issue, once the bankers were shut-up by the steady -and reliable- cash cow quality of the properties... in spite of last year (or two) slight scare of some overbuilding in specific markets... |
