Industrial real estate is a type of property that provides space for the production and distribution of goods. The industrial real estate has been experiencing a strong growth in recent years due to the increase in global demand for manufacturing, logistics and storage services.
Industrial real estate can be classified into Land, office, warehouse, retail, lab or manufacturing space.
Industrial Land Use is a piece of land for industrial purposes, eg. manufacturing, warehousing, processing or open storage. Industrial land is required in areas where pollution (like air & sound pollution) is likely to be high. Industries are normally placed away from urban residential areas. Normal FSI in industrial buildings 0.5 to 0.75 for single level structures
Land Attributes to be considered while working on Industrial land
- Location (Village name)
- Google Coordinates
- Survey No
- Zoning and conversion status
- Road width
- Ownership Profile
- FSI achievable
- Cost / Sq. Ft on FSI
- Rental rate per sft in the area
- Any Gaps / Water bodies / Cemetery / Temple land/ HT Lines
A warehouse is a building for storing goods.Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs etc. They are usually large plain buildings in industrial parks on the outskirts of cities, towns or villages.
They usually have loading docks to load and unload goods from trucks. Sometimes warehouses are designed for the loading and unloading of goods directly from railways, airports, or seaports.
They often have cranes and forklifts for moving goods which are usually placed on ISO standard pallets loaded into pallet racks. Stored goods can include any raw materials, packing materials, spare parts, components or finished goods associated with agriculture, manufacturing and production. In India, a warehouse is also referred to as a godown.
A factory, manufacturing plant or a production plant is an industrial site, usually consisting of buildings and machinery, or more commonly a complex having several buildings, where workers manufacture goods or operate machines processing one product into another.
Most modern factories have large warehouses or warehouse-like facilities that contain heavy equipment used for assembly line production. Large factories tend to be located with access to multiple modes of transportation, with some having rail, highway and water loading and unloading facilities.
Cold storage is basically a term used for temperature controlled storage that included chiller and frozen storage facilities, usually used to store food, Pharma products, chemicals or pharmaceuticals. “Cold storage” could be something as small as a walk-in cooler or freezer or a large facility with bulk or palettized storage in chambers
An industrial park (also known as industrial estate, trading estate) is an area zoned and planned for the purpose of industrial real estate development. An industrial park can be thought of as a more “heavyweight” version of a business park or office park, which has offices and light industry, rather than heavy industry. It includes warehouses and storage spaces and hybrid buildings
The Free Trade and Warehousing Zones (FTWZ) is a special category of Special Economic Zone and is governed by the provisions of the SEZ Act and the Rules. FTWZ is designated as a deemed foreign territory and are envisaged to be integrated zones and to be used as International Trading Hubs. These places are custom bonded
A container freight station is a facility where freight shipments are consolidated or de-consolidated and staged between transport legs. A CFS is typically located in proximity to an ocean, port, or airport where cargo containers are transported to and from.
ICD means Inland Container Depot situated at inland points away from sea ports. ICD is a term used in India in the field of Imports and Export of sea shipments. ICD is formed to help importers and exporters to handle their shipments near their place of location
A dry port (sometimes inland port) is an inland intermodal terminal directly connected by road or rail to a seaport and operating as a centre for the transshipment of sea cargo to inland destinations.
Cold storage is basically a term used for refrigerated or frozen storage facilities, usually used to store food or pharmaceuticals. “Cold storage” could be something as small as a walk-in cooler or freezer.
These warehouses are owned, managed and controlled by government as well as private agencies. Bonded warehouses are storage facility used to store imported goods for which import duty is still to be paid. The bonded warehouses run by private agencies have to obtain license from the government.
This type of storage facility usually has large space, which enables fast movement of large quantities of stores for short period. While on the other hand, conventional warehouses hold goods for long time, say 6 months or 1 year. These warehouses basically by nature, serve as points in the distribution system at which goods are procured from different suppliers and quickly transferred to various customers.
These centers provide computerized control, which make movement of goods quick, fast and reliable. In order to minimize delivery time, these storage facilities are found close to transportation centers. In some cases, distribution centers handle the goods for less than a day period such as in case of fast foods or perishable products. Most of the goods enter in the early morning (dawn time) and are transferred/distributed by the evening time. E-tailing is the demand driver for industrial real estate.
Challenges for Realtors in closing transactions in Industrial Real estate
- Large Spaces are not available in the market. With growth in E-commerce and mass manufacturing Realtors find it tough to match demand with supply
- Availability of “A” Grade Space–There is a storage of Grade A space across India as current needs require height for vertical stacking, more loading bays and areas to enable faster despatched and many more such technical points. Specifications will be explained in the next article by me.
- Approvals – older warehouses do not have the right kind of approvals, today and current tenants demand a fully approved warehouse space
- Fire NOC – apart from extinguishers, fire hydrants and sprinkler systems have become mandatory to obtain NoCs. Most older buildings do not have the space or provisions for the same
- Dangerous goods and chemical storage facilities – many material require specialized storage with safety precautions and these have not been provided for.
- Clients Budget vs Location – clients are looking for enhanced specifications at market rates for older Warehouses in locations closer to the city, which cannot be matched
- STP & ETP – sewerage treatment plants and effluent treatment plants are required for pollution NoCs and the guidelines are being implemented now stronger than ever before
- Slow Decision – multiple approvals from tenants at multiple levels make the process slow apart from varying client needs and a non buoyant economy
- Generating genuine enquiries – most enquiries in the industrial space are for data collection and to access market rentals and renegotiate with existing landlords rather than to find a newer space
- Competition working for “0%” Brokerage – many large corporate Realtors have adopted a strategy of not charging the tenant a fee only to obtain an exclusive mandate and they use the mandate of a good profile client to extract a larger fee from the landlord
With this I have covered the basics of industrial Real estate without touching up on the potential for brokers as the potential in this sunrise sector is well known and can be a separate article by itself
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