2025 Outlook: Avistone’s Strategic Focus on Multi-Tenant Industrial Properties

Why Multi-Tenant Industrial Properties in 2025?

Avistone remains committed to acquiring and managing multi-tenant industrial properties nationally, a specialized asset class that provides distinct advantages compared to other real estate sectors:

Diverse Tenant Base
Multi-tenant industrial properties attract a broad spectrum of tenants from various industries, drawn to flexible and cost-effective spaces. The diversity of tenants offers several key benefits:

• Tenant Concentration: Properties are carefully selected to ensure no single tenant occupies more than 20% of the space, reducing lease expiration risk.
• Economic Resilience: A diverse tenant base mitigates exposure to downturns in any one industry, stabilizing rental income.
• Lease Renewals: With approximately one-third of leases renewing annually, income remains steady and adaptable to market conditions and inflationary trends.
• Tenant Retention: The flexibility in unit sizes allows tenants to scale up or down within the same property, promoting long-term retention as businesses evolve.

These factors contribute to operational stability, which is crucial for maintaining consistent revenue streams in an evolving market.

Value-Add Opportunities
Avistone actively seeks value-add opportunities in underperforming properties, focusing on assets with significant potential for improvement:

• Functional Obsolescence: Properties with excess office space—often a legacy of 1980s-era “office creep”—are reconfigured to meet the current demand for industrial and warehouse space.
• Capital Deficiencies & High Vacancy Rates: Properties requiring capital upgrades, due to outdated layouts or high vacancy rates, are repositioned to increase tenant attraction and occupancy.
• Near-Term Loan Maturities: Properties facing loan maturity challenges in a conservative lending environment provide acquisition opportunities, as owners may prefer to sell rather than invest additional capital to refinance at lower loan-to-value ratios.

Through space reconfiguration, aesthetic improvements, and driving occupancy, Avistone enhances a property’s appeal and revenue potential, ultimately delivering strong exit values and attractive returns for investors.

Decreasing Supply, Increasing Demand
The supply of multi-tenant industrial properties continues to decrease due to several factors:

• Conversions to Higher-Value Uses: Industrial properties located in city centers are increasingly repurposed for higher-value applications, reducing available space.
• Rising Land Prices and Construction Costs: The high costs associated with land acquisition and building materials have slowed new developments, exacerbating supply constraints.
• Growing Demand: The rapid growth of e-commerce, coupled with advancements in automation and logistics, has heightened the demand for warehouse and distribution spaces.

These supply-demand dynamics make multi-tenant industrial properties a highly attractive investment opportunity in 2025, particularly in high-growth markets where space is limited.

Conclusion

Avistone’s strategic focus on acquiring and managing multi-tenant industrial properties is well-aligned with favorable economic and market conditions in 2025. The combination of a diverse tenant base, significant value-add potential, and favorable supply-demand dynamics ensures stability and growth opportunities in this asset class. By leveraging our expertise in identifying and repositioning underperforming assets, Avistone is positioned to deliver exceptional investment opportunities that capitalize on the evolving industrial real estate landscape, both in 2025 and beyond.