A recent report in the Wall Street Journal confirms that America is making a strong comeback in the manufacturing industry, with record-breaking spending on factory and manufacturing construction. This growth in manufacturing is fueled by green-energy incentives, concerns about foreign supply chains, and the belief of many experts that it is here to stay. This resurgence has the potential to positively impact a range of industries, including the commercial property market and, in particular, the multi-tenant industrial sector also known as flex industrial.
The multi-tenant industrial sector is an attractive option for light manufacturing companies of all sizes, as it features rentable units that can be configured to meet a wide range of tenant needs. What’s more, multi-tenant projects are designed to offer a variety of spaces and lease terms to accommodate the requirements of various tenants. These projects can include a mix of light manufacturing with last-mile distribution, e-commerce, medical testing, robotics, and office space, allowing tenants to adapt the space to their unique needs and production processes.
The flexibility and adaptability of tenant space can be particularly appealing to manufacturing companies that require specialized equipment or workflows as they can customize the space to meet their specific needs. With more products being produced domestically, there will also be an increased demand for storage and distribution facilities to move those products to market. Flex industrial projects can provide this type of space by offering a range of options for tenants that require:
The return of manufacturing to the United States could also lead to increased innovation and investment in scalable engineering technology to improve manufacturing processes and increase efficiency. This would effectively drive demand for industrial spaces that can accommodate this technology, such as those that offer high ceilings, large floorplates, and ample power and data infrastructure, allowing tenants to operate at peak efficiency.
Moreover, as companies increasingly prioritize sustainability and environmental responsibility in their operations, there will be a greater need for sustainable and energy-efficient light manufacturing spaces. Multi-tenant industrial projects can offer this type of space, with developers incorporating sustainable design elements into their projects to reduce energy consumption and minimize environmental impact. These sustainable features may include solar panels, green roofs, and energy-efficient HVAC systems.
Investing in multi-tenant industrial properties may offer an attractive means for investors to capitalize on the regrowth of manufacturing in the U.S. Construction spending related to manufacturing reached $108 billion in 20221, up from $75.4 billion in 2020 and is only expected to increase and confidence continues to be restored in the construction industry after the uncertainties of the pandemic.
This projected spending does not include the effects that increased manufacturing will have on the expected continued growth of e-commerce and online retail, and the limited availability of warehouse space in many areas in major metropolitan markets. Additionally, supply chain issues from the pandemic have significantly increased the focus on domestic manufacturing, and recent government spending on infrastructure and renewable energy have furthered the emphasis on U.S. manufacturing and construction. Developers and contractors are investing heavier than ever in new technologies to drive efficiency, which is expected to boost profit, reduce costs, and streamline operations with exciting digital innovations.
The return of manufacturing to the United States has the potential to positively impact the multi-tenant industrial sector in numerous ways. The increased demand for manufacturing space, warehousing and distribution facilities, and industrial technology will drive stronger demand for multi-tenant industrial projects, which can effectively accommodate a range of tenant needs and production processes. Additionally, the increased focus on sustainability and environmental responsibility will create substantial demand for energy-efficient and sustainable industrial spaces, which multi-tenant industrial projects can offer through innovative design and construction techniques. As manufacturing continues to return to the United States, the multi-tenant industrial sector is well poised to benefit. Investors should consider exploring this sector as a viable option for their investment portfolios, given the projected growth of e-commerce and the increased focus on sustainability, multi-tenant industrial properties are poised to see significant growth in the coming years.
With over 160 years of combined industry experience among our executive team, we are confident in our ability to identify, acquire, and operate properties that deliver our investors attractive yields and a strong total return, with relatively low risk. Contact us today to learn more about our investment opportunities.
© 2024 Avistone, LLC. All rights reserved.
*IMPORTANT DISCLOSURES: This communication is intended exclusively for the private and confidential use of accredited investors. It is transmitted by the sponsor of the investment opportunity, Avistone, LLC, or one of its affiliates (referred to as "Avistone" or "Sponsor") and is provided solely for informational purposes. All information and opinions contained herein, including assumptions and projections (collectively referred to as "Projections"), are furnished by the Sponsor. The Sponsor and its affiliates make no representations or warranties regarding the accuracy of such information and disclaim any liability in this regard. None of the content in this communication is intended to create a binding obligation on the part of the Sponsor or its affiliates. This communication is fully qualified by reference to the comprehensive information regarding the offering set forth in the Sponsor's offering documents, including any private placement memorandum, operating agreement, and subscription agreement (collectively referred to as "Offering Documents"), which should be carefully reviewed before making any investment.
The Projections provided by the Sponsor, including target IRR, target cash-on-cash, and target equity multiple (referred to as "Targets"), are hypothetical and are not based on actual investment results. They are presented solely to provide insight into the Sponsor's investment objectives, outline anticipated risk and reward characteristics, and establish a benchmark for future evaluation of the Sponsor's performance. The Sponsor's Projections and Targets do not constitute predictions, projections, or guarantees of future performance. There is no assurance that the Sponsor will achieve these Projections or Targets. Forward-looking statements, including the Sponsor's Projections and Targets, inherently involve a variety of risks and uncertainties, and actual results may substantially and materially vary from those anticipated. Refer to the applicable Offering Documents for disclosures concerning forward-looking statements. Projections and Targets, including forward-looking statements, should not be the primary basis for an investment decision. Avistone and its affiliates do not provide any assurance regarding returns, or the accuracy or reasonableness of the Projections or Targets provided by the Sponsor. Past performance does not predict future results. The historical performance record of Avistone is not indicative of future outcomes. Third-party audits have not been conducted on the performance of Avistone's prior projects. Differing property offerings and commitment dates for individual property offerings resulted in varying returns for investors.
The metrics of the Full-Cycle Track Record on industrial properties are calculated based on weighted averages that treat investment dollars equally and are computed by aggregating the outcomes of all Avistone full-cycle industrial property investments, with weights corresponding to the respective capitalization amounts for each Full Cycle Investment. This real estate investment is speculative and involves substantial risk. There is a potential for a partial or complete loss of principal investment and should only be undertaken if you are prepared to bear the consequences of such a loss. Thoroughly review all of the Sponsor's Offering Documents, including any "Risk Factors" therein. For additional information concerning risks and disclosures, please visit https://www.avistone.com. None of the content in this communication should be considered investment advice, whether regarding a specific security or an overall investment strategy. Reproduction or distribution of this message to any individual or entity outside the recipient's organization is prohibited without the express consent of Avistone.