Guides

Industrial Real Estate Investing

Industrial real estate generally covers a range of property types including warehouse and distribution space, last mile logistics facilities located closer to population centers, light manufacturing buildings, flex space that blends office and warehouse use, and truck terminal or cross-dock facilities designed for rapid freight transfer. Industrial underwriting generally focuses on physical specifications that drive a building's functional usefulness to modern tenants, including clear ceiling height, the number and configuration of dock high loading doors relative to building size, trailer and truck court depth for maneuvering, column spacing that affects racking and layout efficiency, and power capacity for facilities with manufacturing or heavy equipment needs. San Diego, CA offers a distinctive industrial market shaped significantly by its position near the Otay Mesa border crossing with Mexico, which generally supports demand for logistics and cross-dock facilities serving cross-border trade and manufacturing supply chains connected to Tijuana's manufacturing base, alongside Kearny Mesa and other central San Diego submarkets that generally serve more localized distribution and light manufacturing tenants. E-commerce driven demand has generally been a significant tailwind for industrial real estate broadly over recent years, as retailers and logistics companies generally require more warehouse and last mile distribution space to support faster delivery expectations, though industrial demand and rent growth can generally vary meaningfully by submarket and by how directly a given facility serves e-commerce fulfillment versus more traditional manufacturing or storage uses. Industrial leases are generally often structured as triple net, shifting real estate taxes, insurance, and maintenance to the tenant, which combined with generally lower ongoing capital expenditure needs compared to multifamily or retail with heavy common area finishes, has generally made industrial one of the more landlord-favorable asset classes from a management perspective. Because industrial real estate is generally available in most metro areas nationally and the underwriting metrics are relatively consistent from market to market, it is generally one of the more commonly identified replacement property types for San Diego, CA investors pursuing a 1031 exchange, whether they are staying local near the border-adjacent submarkets or diversifying into industrial product in other logistics-oriented metro areas around the country. Investors seeking industrial exposure without direct property management can generally consider DST offerings built around industrial portfolios, which can preserve 1031 eligibility while an experienced operator handles leasing and management, though a DST interest may be a security and we do not sell securities, only provide introductions to licensed providers. Educational content only. This is not tax, legal, or investment advice.