One way to create value for an industrial user is to buy a building where they can get additional income from a tenant. Take for example 1-9 Hicks St in Lindenhurst. The building was originally built as 4 separate units. My phone has been ringing off the hook on this building. The building is 6,500 sqft. I have found a sweet spot.
Because of the high price of industrial real estate today relative to the rents, this is a poor market for investors (poor return). This is a market where users will outbid investors every day of the week for a desirable building. Now if a user can buy a building where they can use part of the building and rent out the other part, the opportunity gets even better. Users get to operate their business in their property and at the same time generate some type of income to help defray costs, real estate taxes, insurance, etc.
The big kicker to this deal is as the user grow their business through the years, they can expand into the space that the tenant was previously occupying. If leases are properly structured, a user can grow into their own building over time. The same is true in the reverse. As years and decades go by, if a business contracts, the owner of the building can use less space and rent out previously occupied space. The owner gets income for the rest of their lives.
Buying a multi tenant building is a great strategy for an industrial user to capitalize on both their growth years and waning years. The investment in real estate has been the best over any long period of time. Going multi tenant defrays costs and gives both expansion and contraction opportunities while being invested in one of the greatest asset classes ever, commercial real estate.
The building pictured above is technically still available, multiple offers on it so far. I do have one other great multi tenant opportunity which will be coming to the market shortly. I will post it soon.